1. Definition: A corporation is a legal entity that is separate and distinct from its owners. It is formed through a process called incorporation and is granted legal rights and responsibilities, similar to those of an individual. Corporations can enter into contracts, own assets, sue or be sued, and conduct business operations
2. Limited Liability Protection: One of the primary advantages of a corporation is the limited liability protection it provides to its shareholders. The shareholders’ personal assets are generally protected from the debts and liabilities of the corporation. Shareholders are typically only liable for the amount they have invested in the company
3. Shareholder Ownership: A corporation is owned by its shareholders, who hold shares of stock in the company. Shareholders have the right to receive dividends, vote on major corporate decisions, and participate in the profits and growth of the company. Ownership shares can be freely transferred or sold, allowing for flexibility in ownership structure
4. Board of Directors and Management: Corporations are managed by a board of directors, elected by the shareholders. The board is responsible for making major decisions and setting the strategic direction of the company. The board appoints executive officers, such as the CEO and other top-level management, who are responsible for day-to-day operations
- Double Taxation and Formalities: Corporations are subject to a concept known as double taxation. The corporation itself is taxed on its profits at the corporate tax rate, and shareholders are also taxed on any dividends or distributions they receive from the corporation. Additionally, corporations are subject to various formalities and reporting requirements, such as holding annual meetings, maintaining proper records, and filing tax returns and financial statements.
It’s important to note that the specific regulations and requirements for corporations can vary by jurisdiction. Consulting with a legal or financial professional can provide more detailed information and guidance based on the laws and regulations applicable to your specific location