Corporation

Corporation

A corporation is a legal entity that is separate and distinct from its owners. Corporations enjoy most of the rights and responsibilities that individuals possess: they can enter contracts, loan and borrow money, sue and be sued, hire employees, own assets, and pay taxes. It is often referred to as a "legal person."

History

The idea of a corporation was established in ancient Rome, where certain types of organizations were granted legal rights. The word "corporation" derives from corpus, the Latin word for body, or a "body of people."

Characteristics

Corporations are created and regulated under corporate laws in their jurisdictions of residence. In most cases, corporations are used to conduct business. Corporations can be created in nearly all countries in the world and are usually identified as such by the use of terms such as "Inc." or "Limited" in their names.

Limited Liability

Among the chief advantages of a corporation is the limited liability the corporate structure provides its shareholders. This means that the owners of a corporation are not personally responsible for the corporation's debts and obligations.

Perpetual Existence

Corporations can continue indefinitely, even if ownership or management changes. Shareholders can sell or transfer their shares freely without affecting the corporation's continued existence.

Types of Corporations

There are four main types of corporations: C corporations, S corporations, LLCs, and nonprofit corporations. Each type has its own benefits and drawbacks, and is subject to different regulations and tax requirements.

See Also

• Limited Liability Company
• Partnership
• Sole Proprietorship
• Nonprofit Corporation

References

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