The corporation is the most popular business entity. Corporate entities range in size from one-man outfits to multibillion-dollar international enterprises. Despite these variations in size and function, corporations maintain similar structures.

Identification

Individual states are responsible for enforcing corporate law. Still, all corporations are recognized as being separate entities from owners and management. This distinction provides for limited liability---in which only your direct investment placed into the corporation may be lost.

Benefits

Limited liability status for corporations makes these businesses attractive to investors and employees. Outsiders are more willing to invest and work for the company---knowing their personal assets will not be at risk due to bankruptcy or litigation.

Considerations

Corporations usually employ a dual structure. Owners buy shares within the entity and elect a board of directors to manage the company. Corporations work to balance the goals of owners and employees.

Misconceptions

Despite the limited liability status of the corporation, personal assets of management and large stakeholders may be disputed in a court of law when extreme cases of fraud are alleged.

Warnings

Corporate stability should provide for long-term ownership and management. However, firmly entrenched business persons should embrace new strategies that add to the business' bottom line. Ignoring change may lead to failure.

Source:

IRS: Corporations

Investopedia: Corporation

Investopedia: Multinational Corporation

More Information:

Investopedia: The Basics of Corporate Structure