Corporations

 Legally distinct from its owners  Treated as if they are individuals  Can own property  Pay taxes  Can hire and fire workers  Can make contracts  Can sue and be sued  Make and sell products

Forming a Corporation Must file Articles of Incorporation  License to do business in a state  Name and purpose  Address of headquarters Must include:  Method of fundraising  Amount of $ corporation intends to raise  Names and addresses of corporate officers  Anticipated length of time corporation will exist If approved: State issues a corporate charter (license)

Corporate Structure  Owners (Shareholders)  Board of Directors  Corporate Officers  Vice Presidents  Department Heads  Employees

Advantages of Corporations 1.Limited liability for owners (shareholders) 2. Flexibility: you can sell or buy shares at any time 3.Separation of ownership from management 4.Can raise lots of capital very easily 5.Longevity

Disadvantages of Corporations 1.Corporate Charter can be expensive 2.Corporations are regulated more than other types of businesses 3.Slow decision making process a.Stockholders (owners) have no say in day to day operations of the company 4.Corporate profits are taxed twice: a.Corporate profits b.Dividends

Other Types of Business Combinations

Horizontal: A merger between two or more companies producing the same good or service (or that acquire one such company by another) Production Transportation Natural Resource

Vertical Combination A merger between two or more companies involved in different production phases of the same good or service. Production Transportation Resources

Franchise  Corporation sells pieces of itself  Buyer is the franchisee Benefits from: Established business practices that work National advertising Brand name recognition Training from corporate headquarters

Conglomerate Combination

Cooperative Members of an industry or market agree to combine aspects of production, etc

Non-Profit Corporations Provide service of product for society Not motivated by profit