Business Forms

1. Business Forms Economics Unit 2 Ms. Whitlow

2. Largest Company

3. Corporations • Approximately 90% of all business in the U.S. is done by corporations • A form of business recognized by law as a separate legal entity having all the rights of an individual. • Corporations have the right to buy and sell property, enter into legal contracts, and sue or be sued.

4. Forming a Corporation • People must file for permission to create a corporation from the national or state government. • The charter states the name of the business, address, purpose, and other features. • The charter also specifies the number of shares of stock. • If a profit is made a dividend is given to each stockholder • www.legalzoom.com

5. Corporation Structure • Each stockowner has certain ownership rights dependent on the type of stock owned. • Common stock: Basic ownership of a company, stockholder usually receives one vote per share. • The board of directors is elected by the stockholders and sets broad policies and goals and hires a professional management team to run the business on a daily basis.

6. Corporation Structure • Preferred stock: represents nonvoting ownership of a corporation. • Receive dividends and are first to have their shares paid off if the company goes bankrupt • If an individual controls 50%+1 of the stock then that individual can control the company.

7. Other Corporations • Public or private? • For Profit or Non Profit

8. Corporations Strengths • Easy to raise financial capital, sells stock to raise money • Can also issue bonds • Can hire the best management team possible to run the company • Provides limited liability for the owners • Unlimited life, the business continues to exist even when the ownership changes hands and ownership is easy to transfer

9. Corporation Weakness • It is difficult and expensive to get a charter • Owners have little say in how the business is operated • Corporations must pay income tax • Corporations are subject to heavy government regulations