corporation (redirected from Incorporated business)
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A legal entity that is separate and distinct from its owners. A corporation is allowed to own assets
, incur liabilities
, and sell securities
, among other things.
A business that is legally completely separate from its owners
. Most publicly-traded
companies (and all major ones) fall under this classification. For United States tax purposes, corporations, legally known as C corporations
, are required to pay income taxes
on their profits
. The advantage to a corporate structure is the fact that, unlike other structures, there is no limit to the number of shareholders. A disadvantage is the fact that, because a corporation is taxed by itself and its individual shareholders
are taxed on dividends
, it is subject to double taxation. It is important to note that the term corporation almost never refers to an S corporation
, which is not entirely separate from its owners.
An organized body, especially a business, that has been granted a state charter recognizing it as a separate legal entity having its own rights, privileges, and liabilities distinct from those of the individuals within the entity. A corporation can acquire assets, enter into contracts, sue or be sued, and pay taxes in its own name. Corporations issue shares of stock to individuals supplying ownership capital and issue bonds to individuals lending money to the business. The corporation is a desirable organization for a business entity for a variety of reasons including the increased capability such an entity has to raise capital. Most large firms, especially those engaged in manufacturing, are organized as corporations. All stocks sold in the primary market and traded in the secondary market are shares of corporate ownership. Compare partnership
. See also incorporate
, limited liability
, unlimited liability
- 1a private enterprise FIRM incorporated in the form of a JOINT-STOCK COMPANY.
- a publicly owned business such as a nationalized industry.
corporation A legal entity created by filing documents with the local secretary of state, commissioner of corporations,or similar official. It may have as few as one shareholder,must begin life with some minimal amount of assets gained as a result of the shareholder(s) paying for shares of stock, may be stipulated as having a limited life span or perpetual existence until formally dissolved, and may be designated as having the powers to do only limited types of things or anything allowed by law.The entity thus created will enjoy all the rights and responsibilities of natural persons,including owning and renting real estate,and suing or being sued in the courts.The IRS allows corporations to be segregated into three main types for tax accounting purposes:
1. S-corporation. A small corporation that is allowed to file information returns only. It pays
no taxes on its income but, instead, sees all income taxed to the shareholders according to
their pro rata share of the corporation.
2. C-corporation. Any corporation that does not meet the limitations for an S-corporation,
or one that otherwise qualifies for S-corporation status but elects to be treated as a C-cor-
poration. The corporation files its own tax returns, pays taxes on income, and then dis-
tributes dividends to shareholders who pay taxes on the dividends.
3.501(c)(3) corporation. A not-for-profit corporation authorized by Section 501(c)(3) of the
Internal Revenue Code, which files an information tax return but pays no taxes.
For income tax purposes, an entity that is incorporated under the laws of a state, a foreign entity that is treated as a corporation under IRS regulations, or an unincorporated entity that elects to be taxed as a corporation by filing Form 8832.