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What is a corporation

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					What is a corporation?



Most businesses start out as a small company, owned by one person or by a partnership.
The most common type of business when there are multiple owners is a corporation. The
law sees a corporation as real, live person. Like an adult, a corporation is treated as a distinct
and independent individual who has rights and responsibilities. A corporation's "birth
certificate" is the legal form that is filed with the Secretary of State of the state in which the
corporation is created, or incorporated. It must have a legal name, just like a person.



A corporation is separate from its owners. It's responsible for its own debts. The bank can't
come after the stockholders if a corporation goes bankrupt.



A corporation issues ownership share to persons who invest money in the business. These
ownership shares are documented by stock certificates, which state the name of the owner
and how many shares are owned. the corporation has to keep a register, or list, of how
many shares everyone owns. Owners of a corporation are called stockholders because they
own shares of stock issued by the corporation. One share of stock is one unit of ownership;
how much one share is worth depends on the total number of shares that the business
issues. the more shares a business issues, the smaller the percentage of total owners' equity
each share represents.



Stock shares come in different classes of stock. Preferred stockholders are promised a
certain amount of cash dividends each year. Common stockholders have the most risk. If a
corporation ends up in financial trouble, it's required to pay off its liabilities first. If any
money is left over, then that money goes first to the preferred stockholders. If anything is
left over after that, then that money is distributed to the common stockholders.

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DOCUMENT INFO
Description: Anyone who's worked in an office at some point or another has had to go to accounting. They're the people who pay and send out the bills that keep the business running. They do a lot more than that, though. Sometimes referred to as "bean counters" they also keep their eye on profits, costs and losses. Unless you're running your own business and acting as your own accountant, you'd have no way of knowing just how profitable - or not - your business is without some form of accounting.