We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Business

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What is a Business Corporation?

Deanna Baranyi
By
Updated: May 17, 2024
Views: 4,482
Share

A business corporation is a U.S. business entity created pursuant to specific state and federal laws. It is formed for the purpose of transacting some form of business. The business may not be exclusively related to trade and commerce, but may include other aspects that generate monetary gain, such as transportation, insurance, banking, mining, and manufacturing. Under the laws in most jurisdictions, the corporation is treated similar to a person. As a result, it can sue another person or corporation, and it can be sued by another person or corporation.

For a business corporation to be in effect, it must have at least one owner or shareholder, but there is no cap on the number of shareholders that a particular corporation may have. The shareholders each own an interest in the corporation, and the interests are divided into stock or shares. In addition, the business corporation is a separate entity from the shareholders. This protects the shareholders from being sued on a personal level and from losing their personal savings if the corporation should be held liable for monetary damages by a court of law.

In most jurisdictions in the United States, the business corporation becomes a legal entity when a shareholder files the Articles of Incorporation with the Secretary of State in the state where business will be conducted or headquartered. At this time, the shareholders must determine how many shares the corporation will be allowed to issue. There must be at least one share for every shareholder, but in most cases, shareholders will hold more than one share. Some shareholders may have a large ownership interest in the corporation, and they will hold shares in the same proportions. For example, a shareholder who has a 40% ownership interest in the corporation will also typically hold 40% of the shares.

A business corporation usually works with specific representatives to conduct business. In general, shareholders do not manage the daily affairs and routine business workings of the corporation. Such responsibilities are typically left to the members of the Board of Directors. The board members are elected by the shareholders and at a minimum include one director, but others may be elected as well. The director usually appoints officers who make sure the director’s requests are implemented.

Generally, the sole purpose of a business corporation is to make money. Unlike other not-for-profit organizations, where the purpose is not to generate a profit but to provide some common good for the public regardless of profit. Non-profit organizations may include religious, educational, and charitable organizations.

Many other countries create and regulate business corporations in a similar way to the United States. For example, Liechtenstein, Switzerland, Austria, England and Germany all have limited liability corporations, similar to the business corporation model. The agency that regulates the businesses may vary in name, but there are many similarities between them.

Share
WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Deanna Baranyi
By Deanna Baranyi
Deanna Baranyi, a freelance writer and editor with a passion for the written word, brings a diverse skill set to her work. With degrees in relevant fields and a keen ability to understand and connect with target audiences, she crafts compelling copy, articles, and content that inform and engage readers.

Editors' Picks

Discussion Comments
Deanna Baranyi
Deanna Baranyi
Deanna Baranyi, a freelance writer and editor with a passion for the written word, brings a diverse skill set to her...
Learn more
Share
https://www.wisegeek.net/what-is-a-business-corporation.htm
Copy this link
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.