Corporation
A corporation is a legal entity created by individuals, stockholders, or shareholders, with the purpose of operating for profit. Corporations are allowed to enter into contracts, sue and be sued, own assets, remit federal and state taxes, and borrow money from financial institutions. Corporations can be either government-owned or privately owned, and they can organize either for profit or as nonprofit organizations.
History of the Term
The concept of the corporation has been around since the Roman Empire. The first modern corporations were established in the 1600s in England. The East India Company, founded in 1600, was the first joint-stock company, meaning that it was owned by multiple shareholders. The East India Company was granted a royal charter by Queen Elizabeth I, giving it the right to trade in the East Indies. This was the first example of a corporation with limited liability, meaning that the shareholders were not personally liable for the company’s debts.
In the United States, the first corporations were established in the late 1700s. The first corporation in the United States was the Bank of North America, which was established in 1781. The first corporation to be chartered by an act of Congress was the First Bank of the United States, which was established in 1791.
Comparison Table
| Type of Entity | Liability | Taxation |
|---|---|---|
| Sole Proprietorship | Unlimited | Pass-through |
| Partnership | Unlimited | Pass-through |
| Corporation | Limited | Double taxation |
Summary
A corporation is a legal entity created by individuals, stockholders, or shareholders, with the purpose of operating for profit. Corporations are allowed to enter into contracts, sue and be sued, own assets, remit federal and state taxes, and borrow money from financial institutions. The concept of the corporation has been around since the Roman Empire, and the first modern corporations were established in the 1600s in England. In the United States, the first corporations were established in the late 1700s. For more information about corporations, visit the Internal Revenue Service website or consult a qualified tax professional.
See Also
- Sole Proprietorship
- Partnership
- Limited Liability Company (LLC)
- Joint Venture
- Limited Liability Partnership (LLP)
- S Corporation
- C Corporation
- Nonprofit Corporation
- Cooperative
- Publicly Traded Corporation
