A corporation, sometimes called a C corporation, is a legal entity independent of its owners. Corporations can make profits, pay taxes and be held legally responsible. Corporations offer the greatest protection to their owners against personal liability, but the cost of forming a corporation is higher than that of other structures. A corporation is a legal entity that is separate and distinct from its owners.
Under the law, companies have many of the same rights and responsibilities as individuals. They can enter into contracts, lend and borrow money, sue and be sued, hire employees, own assets, and pay taxes. A corporation is a legal entity, which means that it is an entity separate from its owners, who are called shareholders. A corporation is treated as a “person with most of the rights and obligations of a real person.” A corporation is not allowed to hold public office or vote, but it does pay income taxes.
It can be established as a for-profit or not-for-profit organization and can be publicly or privately owned. The shares of a public company are traded on a stock exchange. There can be thousands, even millions, of shareholders in a public company. The shares of a private company are not traded on an exchange and there are usually only a small number of shareholders.
A corporation is a distinct legal business entity, meaning that the company owns property, pays taxes, and enters into separate contracts from its owners. The ownership and management structure of a corporation is different from that of other business entities. The owners of a corporation are shareholders (also known as shareholders) who obtain interest in the business by buying shares. Shareholders elect a board of directors, which is responsible for managing the corporation.
Since a company is its own legal entity, it can initiate litigation on its own, protecting its owners from personal liability in the event that legal action is initiated.