Corporation is a business structure which is made by a group of people to make a business venture. The overall management structure of a corporation is totally different from other business entities.
Why were corporations formed?
- To protect constructed railroads
- To make greater money for tribes
- To protect individual investments
- To make the government money
Anwer of “Why were corporations formed?” is 3. To protect individual investments.
Companies are formed to protect individual investments.
How does a corporation help to protect individual investments?
The main advantage of incorporating is your personal assets are not used if a court judgement are entered against your corporation. For example, if the court decides you need to pay the debt of $20000 to the creditors, you don’t need to pay it from your individual assets. Whatever loss you’re in, you’ll only lose the money you’ve invested in the corporation.
Benefits of a corporation
Here are some of the benefits of forming a corporation:
• Tax advantages
• Company can buy and sell property
• Limited liability
• Employees are not required to file income tax returns
• Company can sue and be sued
• Tax deductions
• Shareholders have voting rights
• There are no shareholders
• No need to register a company
• The company can have a board of directors
• Directors are chosen by the shareholders
• Directors cannot be removed except for cause
• Directors are not liable for company debts
• Directors are liable for their own personal assets
• Company can borrow money from banks
• Bankers have limited liability
• Company can pay dividends to shareholders
• Companies are eligible for bankruptcy
• If a shareholder dies, the company will be dissolved
• If a shareholder dies, the shareholders’ estate will receive the balance of the company
• Corporations are considered as separate legal persons
• Shareholders are not liable for the company’s debts
• There is no such thing as a corporation’s death
• Companies can own and control land
• Companies are not taxed on income from real estate
• Companies can sue and be sued
• Companies can employ lawyers and accountants
• Companies can enter into contracts
• Companies can make contracts with third parties
• Companies can buy and sell goods and services
• Companies can issue debt and equity securities
• Companies can own other corporations
• Companies can be liquidated
• Companies can pay dividends
• Companies can merge or consolidate
• Companies can hold bank accounts
Also Read:What Are The Objectives Of Business?