1 / 11

Section 7.2

Section 7.2. Corporations. What is a corporation?. A corporation is a business that is registered by a state and operates apart from its owners. Ownership or equity in a corporation is represented by shares of stock. 3 Major Types of Corporations. C-Corporation Subchapter S Corporation

ilya
Download Presentation

Section 7.2

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Section 7.2 Corporations

  2. What is a corporation? • A corporation is a business that is registered by a state and operates apart from its owners. • Ownership or equity in a corporation is represented by shares of stock

  3. 3 Major Types of Corporations • C-Corporation • Subchapter S Corporation • Nonprofit Corporation

  4. C-Corporation • An entity that pays taxes on earnings. • Shareholders pay taxes • It is the most common corporate form • Protects the entrepreneur from being sued for the actions and debts of the corporation. Examples: Adidas, American Airlines, Ford, Home Depot, Wal-Mart

  5. What are shareholders? • Shareholders are the owners of the corporation. • Make policy decisions

  6. Advantages to Incorporation • Status • Limited liability-liable only up to the amount of their individual investment • The ability to raise investment money • Perpetual existence • Employee benefits • Tax advantages- certain expenses can be deducted from their reportable income.

  7. Disadvantages to Incorporation • Expensive to set up • Taxed heavily Subject to double taxation: It pays taxes on profits, then stockholders pay taxes on dividends they receive from those earnings.

  8. Subchapter S Corporation • Corporation that is taxed like a partnership -Profits are taxed only once at the shareholder’s personal tax rate. • Is not a tax paying entity. • Can have no more than 100 shareholders who must be U.S. citizens. • Can have only one class of stock

  9. Nonprofit Corporation • A legal entity that makes money for reasons other than the owners’ profit. -Any profit must remain within the company and not be distributed to shareholders Example: AARP (The Association for the Advancement of Retired Persons) advocates for the well-being of older persons.

  10. Limited Liability Company • A company whose owners and managers enjoy limited liability and some tax benefits, but it avoids some restrictions associated with Subchapter S corporations. • Many law and medical firms form LLCs.

  11. Benefits to Forming an LLC • Simpler to set up than a corporation • Allows for the flexibility of a partnership structure. • Limited liability like a corporation • Not subject to double taxation. Profits are taxed personally, and shareholders are taxed only once. • No limitations on the number of members or their status

More Related