Corporations are set up for several reasons. A couple of these are to protect the assets of the owners, and to provide an easy way to raise capital for the company. In a sole proprietorship or partnership, the owner(s) are PERSONALLY liable for any losses incurred by the company, whereas with a corporation the owner's (stockholder's) assets are kept seperate, and cannot be accessed except in rare cases where the, "corporate veil may be pierced." Corporations provide an easy way to raise capital, because all they have to do is issue and sell more stock in the company to gain more capital. There are other laws about this, but those are the basics.
One disadvantage is that income from a corporation is, "taxed doubly." When you hear this referred to, people mean that any profits the corporation makes in a given year are taxed, and then the owners are paid through dividends, which are taxed again, even though the money was already taxed as corporate profit.
2006-02-20 18:25:32 UTC
a business has set up a corporation, with a president vp and secretary. It caused the business to be considered a seperate entity under law.
They go to the state where they wish to incorporte and file incorporation fees.
There are various types of corporations for various reasons
trade_info
2006-02-20 18:26:53 UTC
it is a legal form for an entity. instead of one person being in business, a seperate "thing" operates and owns a business.
other forms of entities are partnerships, limited liabilty corporations, etc.
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