Business and Corporate Law
Business and Corporate Law can vary by state. A corporation is a legal entity that is separate from its owners or shareholders. They are formed by filing certificates or articles of incorporation with the Secretary of State where the business will operate. State corporate law governs the duties of corporate shareholders as do the corporate by laws. Corporations are governed by the shareholders who elect the directors who elect the officers who actually run the corporation. Because the corporation exists apart from its shareholders directors and officers it continues to exist even if something happens to the people who own and operate it. There are many types of corporations such as close corporations professional corporations S corporations nonprofit corporations and general corporations.
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Are you Planning to Start your own Business?
A few relevant Factors to Consider in Deciding How to Operate a Business include:
- General partners in a partnership (other than a limited liability partnership) plus anyone who personally owns and operates a business without creating a separate legal entity are personally liable for the debts and obligations of the business.
- Generally corporations are required to pay tax just like "real" people. In some tax systems this can give rise to so-called double-taxation because first the corporation pays tax on the profit and then when the corporation distributes its profits to its owners individuals have to include dividends in their income when they complete their personal tax returns at which point a second layer of income tax is imposed.
- In most countries there are laws which treat small corporations differently than large ones. They may be exempt from certain legal filing requirements or labor laws have simplified procedures in specialized areas and have simplified advantageous or slightly different tax treatment.
- In order to "go public" (sometimes called IPO) -- which basically means to allow a part of the business to be owned by a wider range of investors or the public in general -- you must organize a separate entity which is usually required to comply with a tighter set of laws and procedures. Most public entities are corporations that have sold shares but increasingly there are also public LLCs that sell units (sometimes also called shares) and other more exotic entities as well (for example REITs in the USA) However you cannot take a general partnership "public."
When it comes to legal formalities regarding the setup of a business one has to toil hard to get all paper works done. In fact it’s not only the legal procedure that makes thing tough for us but actually our lack of idea or knowledge of the same also makes thing tiresome and lengthy.
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