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Entrepreneurs protect your hard work - Form a Corporation
A corporation is a body that is separate from its owners known as the stockholders. A corporation has the same rights and obligations of a person and is therefore considered an individual entity. Because a corporation is made up of stockholders, their stocks are traded on the stock exchange. Depending on the size of the corporation, there can be many stockholders. Unlike a public company, a privately held company cannot be traded on the stock exchange and the number of stockholders is usually quite small.
Unlike an individual, a corporation cannot run for a public offers or vote.
How A Company Becomes A Corporation:
In order to become a corporation, they must file an application that provides articles of incorporation with the State of residence, pay the incorporation fee, and must be approved by the State. Once approved, they must create their bylaws. Because drafting bylaws is one of the most important steps for forming a corporation, it's essential there is an attorney on board. The attorney will watch over transactions to ensure everything is conducted properly. Other organizational costs include legal fees, fees for the underwriters for stocks and bonds, and incorporation fees that are recorded as intangible assets.
The stock certificates represent ownership of the corporation and the owners are the stockholders. There are several activities that stockholders deal with including voting for the members of the Board of Directors and other issues that require the actions of the stockholders. Stockholders can also deny additional shares being offered in order for them to maintain greater control of ownership both before and after the distribution of shares.
There are several aspects that separate a corporation from other businesses such as partnerships or sole proprietorship. Forming a corporation can provide a sense of accomplishment, prestige, and a great deal of satisfaction once everything is in place.
Who Elects The Board Of Directors?
The Board Of Directors are elected by the shareholders that are nominated to be brought before the shareholders. In many cases, this is done by the founder of the corporation.
Does A Corporation Have Perpetual Existence?
The charter of a corporation can limit its life but the charter is usually extended. A corporation will continue even if a stockholder dies, an employee is unable to continue, stocks are sold, etc. A corporation is owned by stockholders but managed by the employees.
Can Creditors Take Stockholders' Assets?
The liability of a stockholder is limited to the amount they have invested in the corporation. Their personal assets are off limits to creditors that are looking for payments owed by the corporation.
Corporations Can Own Property & Have Certain Rights:
Corporations are considered separate legal entities that perform business operations. It can own property, enter into binding contracts, borrow money, pay taxes, and can be sued or can sue.
Can An Individual Buy & Sell Stock?
If an individual buys stock in a corporation they will received a certificate that shows how many shares they have purchased. With a public company, the individual can transfer any and all of their stocks as well. If an individual wishes to sell their shares, they do not need the approval of other stockholders and the same is true for purchasing stocks. Privately held companies may have restrictions on the transfer of stocks.
Do Investors Manage The Corporation?
In general, no. Most corporations hire their own team of managers to operate the company. The investors will vote to decide who will hire the management team.
How Corporations Raise Capital:
A corporation can easily raise capital by selling stocks and bonds which provides the corporation with a greater amount of resources because they are not limited to a small number of people. Because of limited liability and the ability to transfer ownership rights makes it very easy to raise capital by selling stocks and issuing bonds.
Corporations Must Deal With Problems Or Pay The Consequences:
A corporation's objective should be dealing with at least 80% of all problems. There should always be a set deadline for making decisions and stay with those decisions. Decide who will be responsible for solving problems. If a corporation does not have someone in place, there can be serious repercussions.
Problems that can arise might be due to poor management, unforeseen damage to stockholders, not realizing the full potential value of a corporation, and not offering incentives for better management.
Are There Government Regulations For Selling Stock?
There are government regulations in place for selling stocks in order to protect the stockholders and the owners. State laws have their own requirements for issuing stocks and distributions to the stockholders. Publicly held entities with stocks trading on the stock exchange are required to file their financial statements and other needed documents with the Securities and Exchange Commission. Federal securities laws govern the sales of stocks.
A corporation is a body that is separate from its owners known as the stockholders. A corporation has the same rights and obligations of a person and is therefore considered an individual entity. Because a corporation is made up of stockholders, their stocks are traded on the stock exchange. Depending on the size of the corporation, there can be many stockholders. Unlike a public company, a privately held company cannot be traded on the stock exchange and the number of stockholders is usually quite small.
Unlike an individual, a corporation cannot run for a public offers or vote.
How A Company Becomes A Corporation:
In order to become a corporation, they must file an application that provides articles of incorporation with the State of residence, pay the incorporation fee, and must be approved by the State. Once approved, they must create their bylaws. Because drafting bylaws is one of the most important steps for forming a corporation, it's essential there is an attorney on board. The attorney will watch over transactions to ensure everything is conducted properly. Other organizational costs include legal fees, fees for the underwriters for stocks and bonds, and incorporation fees that are recorded as intangible assets.
The stock certificates represent ownership of the corporation and the owners are the stockholders. There are several activities that stockholders deal with including voting for the members of the Board of Directors and other issues that require the actions of the stockholders. Stockholders can also deny additional shares being offered in order for them to maintain greater control of ownership both before and after the distribution of shares.
There are several aspects that separate a corporation from other businesses such as partnerships or sole proprietorship. Forming a corporation can provide a sense of accomplishment, prestige, and a great deal of satisfaction once everything is in place.
Who Elects The Board Of Directors?
The Board Of Directors are elected by the shareholders that are nominated to be brought before the shareholders. In many cases, this is done by the founder of the corporation.
Does A Corporation Have Perpetual Existence?
The charter of a corporation can limit its life but the charter is usually extended. A corporation will continue even if a stockholder dies, an employee is unable to continue, stocks are sold, etc. A corporation is owned by stockholders but managed by the employees.
Can Creditors Take Stockholders' Assets?
The liability of a stockholder is limited to the amount they have invested in the corporation. Their personal assets are off limits to creditors that are looking for payments owed by the corporation.
Corporations Can Own Property & Have Certain Rights:
Corporations are considered separate legal entities that perform business operations. It can own property, enter into binding contracts, borrow money, pay taxes, and can be sued or can sue.
Can An Individual Buy & Sell Stock?
If an individual buys stock in a corporation they will received a certificate that shows how many shares they have purchased. With a public company, the individual can transfer any and all of their stocks as well. If an individual wishes to sell their shares, they do not need the approval of other stockholders and the same is true for purchasing stocks. Privately held companies may have restrictions on the transfer of stocks.
Do Investors Manage The Corporation?
In general, no. Most corporations hire their own team of managers to operate the company. The investors will vote to decide who will hire the management team.
How Corporations Raise Capital:
A corporation can easily raise capital by selling stocks and bonds which provides the corporation with a greater amount of resources because they are not limited to a small number of people. Because of limited liability and the ability to transfer ownership rights makes it very easy to raise capital by selling stocks and issuing bonds.
Corporations Must Deal With Problems Or Pay The Consequences:
A corporation's objective should be dealing with at least 80% of all problems. There should always be a set deadline for making decisions and stay with those decisions. Decide who will be responsible for solving problems. If a corporation does not have someone in place, there can be serious repercussions.
Problems that can arise might be due to poor management, unforeseen damage to stockholders, not realizing the full potential value of a corporation, and not offering incentives for better management.
Are There Government Regulations For Selling Stock?
There are government regulations in place for selling stocks in order to protect the stockholders and the owners. State laws have their own requirements for issuing stocks and distributions to the stockholders. Publicly held entities with stocks trading on the stock exchange are required to file their financial statements and other needed documents with the Securities and Exchange Commission. Federal securities laws govern the sales of stocks.
