What Is A Corporation?

Any reputation management expert company knows that there are different types of U.S business, which include some being a corporation, partnership and others being a sole proprietorship. A corporation differs from a sole proprietorship and a partnership because it is a legal entity that is entirely separate from the parties who own it. It can enter into binding contracts, buy and sell property, sue and be sued, be taxed and be responsible for its actions.  When it comes to the types of U.S businesses, sole proprietorship is 75%, corporations are 19% and a partnership is only 6% of the number of businesses in the U.S.  For the sales revenues, sole proprietorships only account for 5%, partnerships for 8% and corporations are 87% of the sales revenue.

There are several things to know about corporations, which include ownership and stock, the benefits of incorporation, limited liability, financial resources, specialized management, continuity and transferability, and the drawbacks to incorporation. The reason why the reputation management expert company should know about this is due to the fact that they are only a small business and it is good to compare your business to other businesses in the same field. Shareholders invest money in them by buying the shares of stocks’ own corporations. Corporations are able to elect a board of directors that is in charge of all legal responsibilities for the corporation. When it comes to corporations, they actually have several advantages compared to a partnership and sole proprietorship. These include having an important advantage of incorporation, which is limited liability. This means that the owners are not responsible for any obligations of the corporation and can lose no more than the amount they have personally invested in the company. Incorporation makes it easier to access financing and since the corporation is a separate legal entity; it exists beyond the lives of its owners. You will find many skilled and talented employees when it comes to a corporation’s team ethic. There are also many disadvantageous to a corporation compared to sole proprietorship and partnerships which include the goals of corporate managers, who don’t necessarily own stock, and shareholders who don’t always work for the company can differ. It is costly to set up and have government oversight for the corporation. It is also subject to double taxation meaning that corporations are taxed on their earnings. When the earnings are distributed as dividends, the shareholders pay taxes on these dividends.