A Corporation is a separate entity from its owners. They have some similarities with partnerships but key differences set them apart.

 

Key Highlights

• Double taxation – taxed at the corporate level and again when it pays dividends to stockholders.

• Limited liability for stockholder.

• Has perpetual life.

• More dynamic than most entities.

 

Formation

• Legal documents must be filed with the state.

• Must have articles of incorporation

  • Corporate name

  • Number of authorized stock

  • Filed with the secretary of state

  • Must have bylaws and reoccurring meetings with the board of directors

 

Operations

• Shareholders are considered the “owners.”

• The stockholder elect a board of directors that oversee the company.

• The board of directors hire the officers (CEO, CFO, CMO etc.).

• The officers run the day-to-day operations of the corporation.

• In small corporations you can have an individual who is a shareholder, member of the board, and a corporate officer.

 

Termination

• Directors vote to dissolve the corporation.

• Involuntarily dissolved judicially (bankruptcy, cases of fraud, etc.)

• Failure to pay annual fees or file annual reports.