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Types of Corporations

C Corporation

A Quick Explanation on Corporate Laws

A Quick Explanation on Corporate Laws

Corporate law includes those laws which
govern corporations as an entity, as well as the laws which apply to the
individuals which comp
rise that entity. That may include
shareholders, those in leadership roles and creditors of that corporation.

 

Some types of corporations have limited
liability and others have unlimited legal liability for the actions or in
actions of the corporation as an entity. The laws which apply to corporations
vary according to the type of corporation, as well as the type of business
conducted by that corporation.

 

The law treats a corporation as an
individual, separate from those which work for or control that corporation.
That means that in most cases individuals are not held liable for the
corporation. Take for example a corporation which declares bankruptcy. Corporate
law would dictate the responsibility of that company to creditors, as well as
to shareholders. In most cases, no single individual would be responsible for
the corporation as an entity, but the responsibility would instead fall on the
corporation
itself. However, shareholders
may lose their shares in order to pay off the creditors.

 

Corporate law often include a law firm with a myriad of lawyers that
work there. That law firm may be
a corporation as well being governed by the partners in that
firm. Depending on th
e type of corporation formed by those
individuals, the individual lawyers may or may not be legally liable for their
actions in the courtroom and outside of the courtroom.

Umbrella Corporation Explained

Umbrella Corporation Explained

Umbrella corporations are those corporations
which cover many smaller corporations. For example, an umbrella corporation may
provide services, such as legal services, for the smaller companies which are
protected by the umbrella corporation.

 

In most cases, an umbrella corporation is
utilized as part of a large structure of corporations in order to provide
services, protection and financing to smaller companies found under the
umbrella of that large corporation.

 

In some cases, a corporate umbrella is used
to cover the larger part of the corporate structure which has several brands
below it. For example, the corporate umbrella may
be
named as the distributor of many different brand name
products.

 

For example, X Corporation may be a
distributor for the products of both Y and Z products. That distributor
protects the smaller corporations, as well as handles much of the financial
issues for those smaller corporations. By taking on the liability and other
issues, the distributor also takes a large percentage of the profits from the
distribution of those products.

 

There are many benefits associated with an
umbrella corporation, including legal liability issues such as those which may
occur with a recall of a product distributed by that corporation. In addition,
the companies which fall under that umbrella may also enjoy discounted services
because of the bulk of business
is conducted
by the umbrella corporation, such as insurance and payroll services.

 

What are Multinational Corporation?

What are Multinational Corporation?

Multinational corporations, also known as
transnational corporations, are those corporations which conduct business in
more than one country, or those which deliver services to more than one
country. In general, the company will only have headquarters in one county, but
they conduct business in other countries.

 

Multinational corporations are important to
the economy
of the countries where the headquarters are located, as well as in the counties where they conduct business. However, that economic impact is not
always positive, as a multinational corporation may take away business from
smaller corporations which conduct business in that country. In either case,
transnational corporations played and continue to play an important role in
globalization and the relationships between differing countries which may rely
on one another for certain types of business, including exporting and
importing.

 

Some transnational corporations offer
employment opportunities in countries that would otherwise have very few. In
addition, a multinational corporation may also contribute to each local economy
where business is conducted in a positive and beneficial manner. There are also
issues of taxation which cross international borders with transnational
corporations, allowing many countries to enjoy the tax benefits of that entity.

 

A transnational corporation can greatly
influence the relationship between the countries where business is conducted.
In fact, many multinational corporations enjoy tax breaks as

an
incentive to doing business in specific counties. That strengthening of
relationships between counties also helps the economy in those countries, as
well as ha
s an influence over the global economy.

 

Overview of the Different Types of Corporations

Overview of the Different Types of Corporations

Types of corporations


Each type of corporation has liability as an
entity. However, many times the individuals employed by a company are not held
liable for the actions of that entity. Yet, employees of a corporation can be
held liable in cases where they acted alone or without permission from the
corporation.  

 

S corporation

 

S corporations enjoy limited liability, just
as many other types of corporations do. The factor which sets apart an S
corporation is the singular taxation on the profits of the company. The
dividends are distributed to shareholders and employees before the profits are
taxed. Each individual is then responsible to declare those dividends as income
and pay taxes as an individual.

 

C corporation

 

C corporations are those corporate entities
which receive double taxation on the profits of the company. The profit is
taxed at the corporate level and again when it is distributed to shareholders.
C corporations can become S corporations in order to receive singular taxation,
but it is dependent on the number of shareholders.

 

Multinational corporation

 

Multinational corporations are those
corporations which conduct business in more than one country. In most cases, a
multinational corporation will have their headquarters in one country with
offices being found in many other countries.

 

Corporate law

 

Corporate laws include those laws which
govern the actions and legality of those actions, of corporations as an entity.
In most cases, individuals cannot be held liable for actions of the corporate
entity, unless they acted as individuals rather than employees of that company.

 

Umbrella corporation

 

Umbrella corporations are those corporations
which offer legal and financial protection, as well as service
s too many smaller corporations. For example, umbrella corporations may distribute products from several manufacturing
corporations and then become responsible for any recalls of those products.

The Liability of Different Corporations

The Liability of Different Corporations

There are many types of corporations, but each type adheres to the corporation definition.
Each type of corporation may have differing laws which govern that corporation,
as well as different types of liability. Corporate structure plays a large part
in the corporation definition, which includes the name of the corporation as a
separate legal business which has a separate liability than that of those which
are employed by the corporation.

 

Corporations have liability for issues which
involve the actions of the corporation as a whole. The corporate structure
includes employees, each of which answers to a boss except perhaps for the
president of that company. However, the president of the company may have to
answer to stock holders.
The liability of the corporate entity rests
with the company as a whole, but there are issues
for
which individual employees can be liable.

 

In most cases, a corporation has limited
liability and can only be held accountable in certain circumstances or up to a
certain amount. For example, if corporations should go bankrupt, the employees
of that company and even the owner would not be liable to all creditors in most
cases.

 

As an entity, the corporate structure
includes rights and responsibilities which protect the company, the employees
and those that conduct business with the corporation. Corporations are created
and they can also be dissolved through a process which ends the incorporation
of the individuals or entities which created the company.

 

 

Look Into S Corporation

Look Into S Corporation

The major factor which separates an S corporation from other types of corporations is the manner in which the corporation is taxed by the Federal Government. The income of S corporations is divvied among the shareholders according to their actual number or percentage of shares in the company and then that shareholder must report the income on their individual tax returns. S corporation advantages include the lack of taxation on the profits of that company.
In contrast with a C corporation, which includes double taxation at the point of the company and the shareholder, S corporation advantages include singular taxation at the point of each individual shareholder. S corporation shareholders also enjoy limited liability for the actions of the corporation because S corporations are individual entities, separate from the individual shareholders.
If, for example, there were three shareholders of an S corporation, each would receive dividends according to their percentage of ownership of shares in that corporation. That money would be distributed pre-tax to each employee and/or shareholder. Each of those individuals who make up that S corporation would then be responsible for the taxes on their dividends.
While S corporations are taxed, it only occurs one time, whereas many corporations receive double taxation: once on their profits and then again when the money is distributed. However, S corporations also enjoy the limited liability offered to many other corporations as an added benefit.
What is an S-Corporation?
An S-corporation is a business entity that, according to the United States Federal income tax law, is specially taxed by the Internal Revenue Service. An S-corporation, through this special taxation, is not forced to pay any Federal income taxes to the United States Government. That being said, an S-corporation’s income, debts, or losses are divided and passed onto its shareholders.
Through this division, the shareholders then must report the income or capital losses on their individual income tax returns. This concept, known as single taxation, enables an S-corporation to achieve a unique taxation model which will limit liability through the presence of diversified liability. In other words, the investors in the company face taxation liability concerning the company’s gains or losses.
When a company obtains S-corporation status, they are permitted to utilize a partnership taxation model. This taxation structure offers protection from creditors and spreads liability to individual investors.
All rules and regulations concerning an S-corporation are outlined in Subchapter S of Chapter 1 of the Internal Revenue Code. An S-corporation combines the legal implication of a C-corporation with the United States Federal income taxation model applied to that of partnerships.
Similar to a C-corporation, an S-corporation is considered to exist as a traditional corporation under the law of the particular state in which it is organized. That being said, S-corporations are separate legal entities from their shareholders and, through these specific state laws, will generally provide their shareholders with the same liability protective measures awarded to shareholders of C-corporations.
In regards to the Federal income tax levy, an S-corporation resembles a partnership. Similar to a partnership, all income accrued, all deductions realized, and all tax credits associated with the S-corporation will flow through (annually) to the shareholders of the entity. As a result of this characteristic, income earned by an S-corporation is taxed at the shareholder level and not at the corporate level.
 
How to Receive S-Corporation Status
To receive S-corporation status, the entity must be eligible and regarded as a domestic corporation, a limited liability company. This means the company must be elected to be taxed as a corporation. The underlying entity must possess only one class of stock. The entity must possess at least 100 shareholders—all spouses or families are typically regarded as a single shareholder. The shareholders must be legally recognized as citizens of the United States.
Additionally, the shareholders must be natural persons. This will exclude corporate shareholders and partnerships for shareholder consideration. All profits and losses incurred by the entity must be allocated to shareholders in proportion to each individual’s interest in the business’ operations.
If the underlying entity meets the aforementioned qualifications, it must file Form 2553, titled “Election by a Small Business Corporation” with the Internal Revenue Service. The form must be completed and signed by all of the entity’s shareholders and the election to finalize the corporation must be made by the 15th day of the third month of the taxable year in which the election was held.