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The Corporation

The Corporation. Section 16-2. 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

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  1. The Corporation Section 16-2

  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

  3. 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)

  4. 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

  5. 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

  6. Disadvantages of a Corporation Complex and expensive set-up Slow decision making process Taxes

  7. 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

  8. 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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