A corporation is a legal entity that separates the persons owning or operating a business from the actual business itself. They are set up to protect individuals from a range of possible damages and obligations that might occur as a result of doing business. Unlike other forms of business registration the owners of a corporation have no responsibility for the debts of the business and their liability is limited to the number of shares that they hold in that corporation.
Corporation law has been around for a long time and the oldest corporation in the United States is the Harvard Corporation which was established in 1650 to look after the business affairs of Harvard University. The act of incorporation is the basic of all corporation law and in addition to provided limited liability for owners and shareholders this type of business registration is very common for all large and medium sized companies in the Unites States.
Along with the provision of limited liability corporation law also sets out a series of standards and regulations that corporations must adhere to in order to maintain their incorporated status. They include having a board of directors that is responsible for the operation and governance of the corporation in accordance with the state in which it is incorporated. Shareholders of the corporation elect the board of directors and the board then assume what is called the fiduciary responsible to put the interests of the corporation first in all decisions and deliberations.
Most corporations have a Chief Executive Officer or President who is the spokesperson for the corporation in all public matters and a treasurer who is responsible for maintaining the good financial health of the organization. Other officer positions may be created by the corporation as provided for under the applicable corporation law.
Corporations are created by filing articles of incorporation with the government and these articles contain information about the general intent of the corporation, the number of shares that the corporation intends to issue and the addresses and names of corporate directors. After approval by the regulatory body the board of directors of the corporation meets to create the bylaws of the corporation and proceed to open for business.
There are fees associated with incorporating a business and legal and tax advice is almost a prerequisite to filing for incorporation, but the separation of personal and legal liability is a very attractive asset to incorporation and most businesses are quite willing to pay these small costs to protect the individual interests of its shareholders.