A corporation is a legal business entity characterized as one having a registered agent and being authorized to transact business under its own name. Initially, most corporations were organized by charter. In many jurisdictions today, however, incorporation through registration is more common. All countries allow the formation of new companies through registered agents who are responsible for managing their corporate affairs and ensuring compliance with applicable laws.
There are two types of corporations: C and S corporations. A C corporation, which is most often known as a partnership, is considered a legal entity separate from its owners (itself). This means that the shareholders in a C corporation are not necessarily entitled to the profits earned by the partners. A C corporation may still manage its own affairs and may choose to make its own hire managers and officers, although it must do so under its own name.
A corporation is not itself a legal entity. A corporation becomes a legal entity when it has duly authorized officers and management to undertake certain activities for it. These officers and management officers file all the corporate documents necessary with the appropriate authorities and appoint their own attorney general. A corporation may create a standing committee, board of directors, and officers of each department responsible for particular areas of the business. A corporation also can establish subsidiaries with limited liability.
The general aim of creating a corporation is to separate the ownership and management of the corporation’s resources from the owners. This ensures that the corporation will not be personally liable for the debts of its members. When the company has no direct or indirect shareholders, it will be viewed as a separate legal entity. For example, when a corporation creates an LLC or Limited Liability Company, it actually creates two separate legal entities.
Because corporations have different procedures for creating a standing committee, board of directors, and officers, they must select people whose performance of their duties will contribute to the welfare of the corporation and its invested assets. The officers of a corporation must be experienced in business, law, and commerce to perform the necessary tasks to affect the company’s assets. Therefore, a director or member of a corporation cannot be a personal liability for the company’s debts. A shareholder cannot be held personally liable for the debts of the corporation, unless he or she has a direct or indirect voting power or ownership.
As an asset owner, you can protect your small business assets by using a corporation. In addition, as an individual shareholder, you can help the development of the corporation by donating to it. By forming a corporation, you will have an opportunity to avoid the double taxation imposed by the IRS by getting double benefits. Moreover, as an entity, you will enjoy many advantages. A corporation is a great way to avoid double taxation.