Corporations in the USA: Structure, Benefits, and How to Start

In the United States, many businesses are set up as corporations. Because of this, corporations are quite popular due to their numerous benefits and well-defined structure. This article will explain what corporations are, their benefits, and how to start one. Additionally, we will look at some famous corporations in the USA to provide a clearer picture.

What is a Corporation?

A corporation is a type of business that is separate from its owners. This means the business itself can own property, pay taxes, and be sued, but the owners (called shareholders) are not personally responsible for the business’s debts.

To start with, here are the main parts of a corporation:

1. Shareholders: These are the owners of the corporation. They invest money in the business and get shares in return.
2. Board of Directors: Elected by the shareholders, they make big decisions for the corporation.
3. Officers: Hired by the board of directors, they run the day-to-day operations. Common roles include CEO (Chief Executive Officer) and CFO (Chief Financial Officer).
4. Employees: People who work for the corporation and help it run smoothly.

Types of Corporations

To understand better, let’s look at the different types of corporations in the USA:

1. C Corporation (C Corp): This is the most common type, which pays taxes on its profits. Shareholders also pay taxes on dividends they receive. Examples include Apple, Microsoft, and Walmart.
2. S Corporation (S Corp): Similar to a C Corp but with tax benefits. Profits and losses are passed to shareholders to avoid double taxation.
3. Nonprofit Corporation: Formed for charitable purposes. They do not pay taxes on their profits, which are used to further their mission. An example is the American Red Cross.
4. Professional Corporation (PC): Formed by professionals like doctors or lawyers, offering limited liability protection.

Benefits of Corporations

As we dive deeper, here are some key benefits of corporations:

1. Limited Liability: Shareholders are not personally responsible for the corporation’s debts.
2. Perpetual Existence: The corporation can continue even if the owners change.
3. Easy Transfer of Ownership: Shares can be easily bought and sold.
4. Access to Capital: Corporations can raise money by selling shares.
5. Credibility: Being a corporation can make a business look more trustworthy and stable.

How to Start a Corporation

Starting a corporation involves several steps. First, you need to:

1. Choose a Name: Pick a unique name that follows state rules and includes a corporate suffix like “Inc.” or “Corp.”
2. File Articles of Incorporation: Submit this document to the state, providing details about the corporation.
3. Appoint Directors: Choose the people who will make big decisions for the corporation.
4. Create Bylaws: Write the rules for how the corporation will operate.
5. Hold a Board Meeting: Have the directors meet to adopt bylaws and appoint officers.
6. Issue Stock: Give out shares to the initial shareholders.
7. Get Licenses and Permits: Apply for any necessary business licenses or permits.
8. Register for Taxes: Get an Employer Identification Number (EIN) from the IRS and register for state and local taxes.
9. Maintain Compliance: File annual reports, hold meetings, and keep records.

Famous Corporations in the USA

Now, let’s look at some famous corporations in the USA:

1. Apple Inc.: Known for products like the iPhone and Mac computers.
2. Microsoft Corporation: Famous for software like Windows and Office.
3. Walmart Inc.: The largest retailer in the world.
4. The Coca-Cola Company: Known for its soft drinks.
5. Google LLC: A leader in Internet-related services and products.

Conclusion

In conclusion, corporations are important in the USA because they provide many benefits such as limited liability and access to capital. Starting a corporation involves several steps, but with careful planning, it can lead to great success. Indeed, some of the most famous companies in the world, like Apple and Walmart, are corporations. Understanding how corporations work can help you decide if this is the right structure for your business.