Introduction

A corporation has a key duty to pay taxtaxes.Zedcor Wholly Owned/PhotoObjects.net/Getty Images

A corporation is an independent entity created through a legal process. A group of people put their capital together and incorporate a company in which they subsequently own shares. The shareholders and the corporation are separate entities, each having its own rights and duties. General rights and duties exist that apply to all corporations. However, there are also specific legal obligations that depend on whether the corporation is publicly or privately held. For example, the shares of public companies can be freely traded, while those of a private company are subject to restrictions.

Corporate Personhood

Incorporation creates a separate legal entity from its creators and allows the corporation to operate the way a natural person would (See Reference 1).would. Corporations have a right to own, rent, hire or lease property and where applicable to sell it. A corporation can also sue to enforce its rights such as performance of contract. Conversely, it has a right is eligible to be sued and and, in such a case, its liability is limited to its assets. Corporate rights have protection under the various federal and state laws and in the constitution.

[+] Show Editor CommentsPerpetuity

Unlike natural persons, corporations have a right to exist in perpetuity. One of the key principles of incorporation is perpetual succession such that regardless of the persons who hold office therein, the company continues to exist and operate even if the officeholders leave (See Reference 2) A corporation is also not affected by changes in the shareholding structure, that may arise as a result of share transfers or even the death of theshareholders irrespective of the fact that they own a portion of the company.shareholders.Keep Records

Corporations have a duty to maintain accurate records that enable stakeholders to determine the status of the business (See Reference 3). The Corporation has to keep comprehensive books of accounts and have external auditors conduct annual audits to confirm their veracity. The corporation also ought to file with the companies company’s registry, documents such as the memorandum and articles of association that give information on the company purposes and structure, changes in ownership and particulars of the place of business. Public corporations have an additional duty to file their audited financial statements with the registry to inform the public on of the financial position of the business.

Pay Tax

One of the duties of a corporation is to pay tax tax, since it is engaged in profit-making activities. During the incorporation, companies are registered with the Internal Revenue Service (IRS) as tax payers taxpayers because they earn an income, which is usually legally subject to tax. They receive tax identity numbers or permits and use this to pay their federal, state and and, where applicable applicable, local taxes (See Reference 4). taxes. A corporation that defaults in its obligations to pay tax will be penalized by the IRS and it also runs the risk of damaging its reputation.

Key Concepts

Corporate rights duties

Corporation status

Legal entity

References

Demos: What Is A Corporation?[ http://www.demos.org/publication/what-is-a-corporation ]

Legal Information Institute-Cornell University Law School: Corporations[ http://www.law.cornell.edu/wex/corporations ]

Department of State, Division of Corporations: Business Corporation FAQs[ http://www.dos.ny.gov/corps/bcfaq.asp ]

U.S. Small Business Administration: Corporation[ http://www.sba.gov/content/corporation ]