• taking property;
• holding property;
• conveying property;
• suing others;
• being sued, and
• exercising – like a natural person – other powers that are conferred on it by law.
moreover, the corporation is taxed at special rates. Plus, the stockholders must pay an additional tax upon dividends (or other corporate profits). Corporations are also subject to regulation by:
(ii) the jurisdictions in which they carry on their business.
EXAMPLE:
John – as a sole proprietor – runs several clothing shops. After speaking with other businesspeople, he decides to form a close corporation. Under that arrangement, John still controls the company. Even though there might be others (eg, his wife; his siblings; etc.) who hold shares of stock in the corporation. He also enjoys the limited liability aspect of a corporation in that – if the corporation owes money – a creditor will be limited to the corporation’s assets (not to John’s).a small corporation with limited earnings may elect to be taxed as an ordinary partnership; its stockholders thus enjoy limited personal liability and only individual (not also corporate) taxation. A corporation electing this federal income tax option is a SUBCHAPTER S CORPORATION.
- DE FACTO CORPORATION
-
one existing in fact, but without actual authority of law
EXAMPLE:
Doe Brothers (a partnership) decides to incorporate. After filing what they believe are the necessary papers, the partnership changes its name to Doe Corporation; and continues to carry on its business. Several years later, a creditor sues both the corporation and the partners who run it. Thereby claiming that the partners are not protected from personal liability, because they failed to file certain papers for incorporation (therefore, a corporation was never legally formed). Unless the omission was intentional (or under other rare circumstances), a court will generally find that the error was inadvertent. Thus, the court will deem Doe Corporation to be a de facto corporation; thereby shielding its operators/stakeholders from personal liability.
- NOT-FOR-PROFIT CORPORATION
- one organized for some charitable/civil/social/etc purpose (which does not entail: (i) generating profit; or (ii) distributing its income to members/principals/shareholders/officers/etc.). Such corporations are accorded special treatment under the law (including federal income taxation).
- PUBLIC (OR POLITICAL] CORPORATIONS
- those created by the state to fulfill certain purposes (eg, to form lesser governmental bodies (towns, cities); organize school districts; operate water districts; etc.).
- PRIVATE CORPORATION
- the common corporation, created by – and for – private individuals [for nongovernmental purposes].
- QUASI CORPORATION
- a body that exercises certain functions of a corporate character, but that has not been established as a corporation – by any statute.
