Sophos Law Guides
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What is a Corporation?
A corporation is a legal entity separate from its owners (i.e., shareholders) and it is managed by a dual structure of a suite of officers appointed by a board of directors. A corporation may engage in business, retain its own bank accounts, enter into legal relationships, acquire property, and develop its own credit. The personal assets of the corporation’s owners are generally protected from the debts and liabilities of the corporation. By default, a corporation is taxed on its corporate earnings, with shareholders taxed again on any corporate distributions (e.g., dividends). A corporation’s owners can elect to make an S election with the Internal Revenue Service to avoid this default taxation regime.
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