What
is a Corporation?
A corporation is a separate legal
entity from the individuals who own or operate it. The
shareholders (people who invest money in the company) are the
owners of the corporation. These investors are given shares of
corporate stock in return for the money they invest. Having shares
of stock gives the investors certain rights, such as the right to
vote on important business decision, and the right to receive
dividends. Dividends are profits, which the corporation pays out,
to its shareholders there are two types of corporations:
"C" corporations and "S" corporations. A
"C" corporation is the traditional type of corporation.
Most of the large companies in the United States are "C"
corporations.
Corporations that do not offer
shares to the general public are called privately held
corporations. If you have a privately held corporation, you may
own all the stock in your corporation, or you and several other
people may own the stock. No more than thirty-five shareholders
can hold stock in a privately held corporation in California and
you can have only one class of stock.
In a privately held corporation
you, the owner, may be the only employee, or you may hire other
workers. Generally, in a privately held corporation, the
directors, officers, and shareholders are the employees of the
corporation as well. They receive wages or a salary from the
corporation. The corporation also may pay out dividends to the
shareholders if the corporation makes a profit.
Large corporations, such as those found on the stock exchange, are
publicly held. They sell stock to the general public and anyone
can buy shares. There is no limit to the number of potential
shareholders in a public corporation. For purposes of this
brochure, the following information pertains to privately held
corporations.
|
| There are different types of corporations. A publicly held corporation is traded on the various public stock exchanges, such as NYSE, American Stock Exchange, and NASDAQ. A private or close corporation are more common and the shares are held by a few people, often family members and friends.
|
For
Your Information
What are the
various Business structures you ask?
1. Sole
proprietorship -
2. Partnership
-
3.
Corporation - |
