Structure of Incorporation
Organizing a business includes planning the structure, operations and legal aspects of the company. One common business form is a corporation, which involves filing legal paperwork to begin the process and keep the company in business.
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Definition
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Corporations have an owner or multiple executive managers similar to a sole proprietorship or partnership. However, corporations may have an additional management structure if the company is publicly held. The board of directors represents shareholders who own the business through stock purchases.
Features
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Once incorporated, a business is an independent entity separate from individuals who own or work in the company. Shares---even in closely held corporations--can transfer freely from one individual to the next, essentially changing ownership many times.
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Purpose
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Setting up a corporation allows individuals to have limited liability for the organization's actions. Owners, directors, managers and shareholders are typically shielded from legal issues, up to the amount invested in the company. This protects individuals from business activities that increase risk or may be seen as questionable in the business environment.
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