A corporation is a business owned by the stakeholders who sell shares to public to have enough capital to run and expand the business. It is therefore owned by a group of people.
Key characteristics of a corporation:
1. Limited liability. Stockholders can only lose value of shares if company goes broke but not their personal property.
2. It follows legal charters by state law. Has no federal charters.
3. Death of a member does not liquidate the business since it is owned by many people and management continues.
4. Share holders can easily buy and sell stock without having to be permitted by partners.
5. Stockholders elect a board of directors who hire managers who are responsible for running the company.
6. Corporation pays corporate income tax and not personal income tax.
7. Share values depend on what the company does, future prospects and competition. It can be big or small profit.
8. Financial report required to the state which they are chartered.
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