Corporation

A corporation (Inc.) is a for profit organization that exits separate and apart from its shareholders. It requires the filling of a certificate with the secretary of your state called an "article of incorporation". The business also enters into a kind of contract with the state (corporate charter) in the business agrees to abide by the governing state's regulations, in return for the state's agreement to treat the business as a separate legal entity.

The business entity issues stock to its owners called "shareholders". The shareholders elect a board of directors and the board of director, in return, appoints officers like CEO and CFO.

Some features of Inc. include:

• Personal liability for the owners. Shareholders have no personal liability for the obligations of the corporation.
• Taxation. Income is taxed at entity and stockholder level.
• Business formation: State fillings including articles of incorporation and stock certificates are required.
• Ownership rules: Unlimited number of shareholders allowed; no limit on stock classes.
• Management: Managed by board of directors and officers.

The advantages of Inc. include:

• Unlimited liability protection for stockholders.
• Easiest method for raising capital from multiple investors.
• Perpetual lifetime: The assets and structure of the entity exist beyond the lifetime of any of its shareholders, officers or directors.

The disadvantages include:

• Double taxation at entity and stockholder level.
• Many state regulations and yearly requirements.
• Business formation is more lengthy and expensive than other entities.