The word corporation is usually related to large publicly owned companies, but some corporations have just one owner operating out of an apartment. A U.S. company may be a separate legal entity considered a “firm” or “business.” A corporation may accurately be called a company/ business, but a company/ business may not necessarily be a corporation. A corporation has very distinct characteristics that give it a specific tax and legal structure.
The main feature of a corporation that separates it from other businesses/ companies is the legal independence from the people who create it. A Corporate Lawyer can go over this characteristic more than what is found here and can also go over in more detail the limitations of the independence. Another main feature of the corporation occurs during failure. Shareholders, who do lose the value of their shares upon failure, are not obligated or liable for debts that remain owed to creditors. Some of the world’s wealthiest men are reported to have taken advantage of this. Some are reported to have done it many times. As an example: After taking out huge loans, that are meant to develop and build the corporation, the owners then pay themselves tremendous salaries only to let the company go bust. This feature is what gives a corporation the “limited liability” status and also why their name must end with the initials Inc., LLC, or some other variant.
Corporations are still recognized by the law to have rights and responsibilities like actual people. Corporations are conceptually immortal but when they are “dissolved” either by statutory operation, order of court, or voluntary action on the part of shareholders they “die”. If a corporation is unable to pay their bills, creditors may force the dissolution of the corporation through court order. Liquidation of the assets can occur, but most of the time a corporate restructuring is ordered.
Corporations are created as legal entities, under state laws, as separate entities having their own privileges and liabilities that separate it from those of it’s members. There are numerous forms of corporations including C-Corps, S Corps, and LLCs. Most jurisdictions allow the creation of a corporation through a simple registration process. In today’s computer ran world a corporation can be started in most states over the internet and be legal the same day. The corporation will then have to go through a process of registering for an Employee Identification Number from the IRS and also will have to register for state and local taxes. Depending on the type of business the corporation is set up for there may be special licensing and permitting required. A corporate lawyer can help you determine what you will need.
An issue dealt with by corporate lawyers is corporate governance. Primarily the issue of power relations between the board of directors and the shareholders who elect them. Often times others are concerned such as employees, creditors, consumers, the environment and the community. The United States of America has a single unified boards of directors, but other countries often have a two tiered board. Some countries, such as France, make it an option.
Corporations use corporate lawyers to advise them on legal rights and obligations. They may use the corporate lawyer to represent them in criminal and civil court cases. Often times a corporation will staff an in-house corporate lawyer while others will go to outside law firms or self-employed attorneys.
Corporate lawyers help companies by anticipating problems and helping to keep a corporation out of trouble. They are required to stay up to date on new business laws and regulations. The corporate lawyer may provide advice on labor relations, tax issues, suits against the corporation, employee injury, employee contracts, patents, labor relations, and contracts with suppliers.