A corporation is an organizational structure that is formed under the laws of the state authority and the board consists of a single owner or a group of owners. This group (or the single person) becomes shareholders of the organization. The organization is considered a separate entity and has its distinct identity. It has some advantages over other organizational structures:
- Liability of owners is limited: As the corporation is a separate entity, and its owners are shareholders, the owners have less liability to the debts of the corporation.
- Taxes are paid in the corporate system: The corporation pays its own tax at corporate rate, while the owners pay taxes on all corporate profit they are paid, such as salary, dividends, etc.
- The structure is investor-friendly: The investors are attracted to this sort of companies as it has the sharing system.
- The structure is well built: It has an elected board of Directors, as well as elected officers. These elections are participated by the shareholders of the corporation.
- The shares of the corporation can be transferred freely: The corporation is a separate entity and thus its shares can be transferred without depending on the owners or investors.