Economics: Corporations

What Is A Corporation?

- A corporation is a type of business organization owned by many people, but treated by law as of it were a person. - Corporations can own property, pay taxes, make contracts, sue and be sued.

Selling Stock

- COMMON STOCK gives part ownership to the corporation. - DIVIDEND a portion of a corporations profits paid to its stockholders. - PREFERRED STOCK doesn't give voting rights, but guarantees a dividend and these stockholders have first claim on assets left over if a corporation goes out of business.

Advantages & Disadvantages

- Corporations have a distinct existence from stockholders. - STOCK is a share is ownership in a corporation that entitles the buyer to a certain part of the future profits and assets of the corporation. - A major disadvantage is stockholders have LIMITED LIABILITY, they are not personally responsible, only the business loses money and assets. - Major disadvantages is that corporations are taxed more heavily than other forms of business organizations.

Register The Corporation

- File The articles of corporation include basic information about the corporation. (Name, address, purpose, board of directors, number of shares of stock to be issued, amount of money to be raised through stock).

Corporate Structure

- REGISTER The corporation in the state where it will be headquartered. - SELL Stock. - ELECT Board of directors.

Why Form A Corporation?

- The need for financial capital. - Wanting a financial backers who will lend funds without having hand in the business.

Board Of Directors

- To become incorporated, a company must have a board of different directors. - Directors supervise and control corporations. - Bylaws are a set of rules describing how a stock will be sold.

Joint Ventures

-Are temporary partnerships set up for a specific purpose. - Are dissolved after it ahead accomplished its goal.

Limited Partnerships

-Limited partnerships are businesses in which the partners are not equal. - The general partners is(are) fully responsible for debts of company. - Other partners contribute money or property. - The limited partners have no liability veil f their initial investment.

Franchises

FRANCHISE is a contract in which a business (franchiser) sells the right to use its name and sell its products to another business.