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?

1. To protect constructed railroads
2. To make greater money for tribes
3. To protect individual investments
4. 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?