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The Corporation. Section 8-2. What is a corporation?. A corporation is a business organization that operates as a legal entity that is separate from its owners and is treated by law as if it were an individual person. Can sue or be sued 20 % of all business are corporations.

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The corporation

The Corporation

Section 8-2


What is a corporation
What is a corporation?

A corporation is a business organization that operates as a legal entity that is separate from its owners and is treated by law as if it were an individual person.

Can sue or be sued

20 % of all business are corporations


Starting a corporation
Starting a Corporation

File an application with the state (articles of incorporation)

Write a set of corporate bylaws (rules by which a corporation will operate)

After application is approved, a corporate charter is issued (license to operate)


Issuing stock
Issuing Stock

Closely Held Corporations-onewhose shares are owned by a relatively small group of people (maybe 3 or 4)

Publicly Held Corporations- one that sells its shares openly in the stock market where anyone can buy them

Going Public- when a closely held corporation decides to sell its stock in the stock market


Advantages of the corporation
Advantages of the Corporation

Ability to raise capital- sell more stock

Limited liability- owners won’t lose a lot of their own money

Continued life

Separation of ownership and management


Disadvantages of a corporation
Disadvantages of a Corporation

Complex and expensive set-up

Slow decision making process

Taxes


Franchise
Franchise

Not a form of business ownership

A franchise is a contractual agreement to sell a company’s products or serviced in a designated geographic area

McDonald’s, Subway, Taco Bell, Red Lobster


Which form of business ownership i s best
Which form of business ownership is best?

Choose the one that best fits your need.

Often, corporations start out as a sole proprietorship or partnership.


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