For most people the term “corporation” brings to mind the image of large, chain-like organizations with numerous employees and offices. In recent years, however, the image of a small business or family corporation has become increasingly more popular. In today's day and age, a corporation is a separate legal entity from its owners. It has its own assets, liabilities, and various operations and can therefore pursue all of its own goals and agenda. The general public has come to associate the term corporation with large businesses, and because of this association many small business owners shy away from using the term.
A corporation requires a majority shareholder to maintain control and therefore must meet certain requirements before it can become a publicly traded company. Unlike a sole proprietorship (where the owner is the only person that can bind the business), a corporation must have a board of directors who each hold a majority share of the shares in the company. A corporation can also choose to remain privately held with the option to sell shares to the public should the need arise. Because of these characteristics, a small business or family corporation differs from other types of businesses in a number of ways.
One of the primary differences is that only a few shareholders will be involved in each transaction. There is no formal board of directors to deal with any complaints or questions. Formal meetings are not held regularly. There are generally no formal business meetings either, meaning that there is no opportunity to develop corporate policy or solve problems. This type of small business or family corporation is self-directed and has no obligation to adhere to any corporate policies or laws. It is entirely up to the small business or family to determine how it wants to operate.
Most small business or family corporations are formed by a sole proprietor, although some can be formed by a partner or members of an organization as well. In most cases, all of the stock in a corporation is owned by the owners. This means that the corporation is a separate entity from its owners. Even though the business is considered a small business or family corporation, all of the owners report their personal income on their personal tax returns.
Another difference between a corporation and a small business is that the corporation must follow specific procedures to meet IRS regulations. Corporations have different requirements than small businesses. Corporations must file a form called a 'statement of information' with the IRS detailing their structure and affairs. If a corporation is incorporated in the state, it must also submit reports to the state concerning its financial records.
However, a small corporation is completely exempt from all Federal and State taxes. Corporations must still obtain an individual tax return and pay taxes on income and dividends. The IRS treats a corporation as an entity separate from its owners and requires it to file its own tax returns. A small corporation may still be sued by an individual if the corporation's assets are found to be fraudulent. It is important to remember that if you become a defendant in a lawsuit against your corporation, all of the assets belonging to your corporation will be sold to satisfy the judgment. This means that if you are sued for a debt owed to your corporation by another entity, your corporation will not receive any monies unless it has been determined that the debt was not your company's fault.
When setting up a small business, it is always a good idea to consult with a qualified attorney to make sure that the formation is compliant with all Federal and State laws. An expert can assist you in determining the exact type of corporation you should establish. You can begin the process by filling out a 'formal application' available from the IRS site. The online forms are fairly straightforward and fill out in just a few minutes.
Filing your corporation will be equally as important as making your selection of a small corporation. Every business must establish some sort of legal structure in order to protect itself and it's owners from liability. LLCs are preferable for most people because they are generally exempt from the IRS and state taxes. If an LLC has been chosen for your small business, the process for incorporating it will be relatively simple and quick.
Family business – Wikipedia – small business or family corporation | small business or family corporation
Subsidiary Company: What Is It? – small business or family corporation | small business or family corporation
Family office – Wikipedia – small business or family corporation | small business or family corporation
What’s the Best Entity Type for a Family Business? CPA Practice – small business or family corporation | small business or family corporation
Family Business: How to understand and manage different types of – small business or family corporation | small business or family corporation
One of the best things in life is seeing a smile on your parents' faces, and realizing that you are the reason. Just because someone else is not nice to us, doesn't mean we have to reciprocate in the same way. For every human in this world, God has given something noble and good in his heart. Always take care of your heart.
Small business Word crush is not a new term, but it just came to my attention today. If you are an entrepreneur or a small business owner, there is no doubt that you have heard of Word crush. Word crush is the practice of using words to drive business. It is the opposite of ...
How does a small business like yours get stimulus money? Well, you have to be asking yourself this question. You see, President Obama has said that he wants to help out small businesses by providing them with the money they need to hire new employees, take care of their costs and stay afloat during ...