PowerPoint Presentation

Section 7.2
 Pages 113-117
7.2
Corporations
What you’ll learn
 The
benefits and costs of
setting up a corporation
 The differences between a
C-corporation and a
Subchapter S corporation
 How a limited liability
company works
7.2
Corporations
Why it’s important

In a corporation, the owner
or owners of a business are
protected from liability for
the actions of the company.
7.2
Corporations
Key Terms
corporation
C-corporation
limited liability
Subchapter S corporation
nonprofit corporation
Limited Liability Company
7.2
Corporations
I. CORPORATE FORMS
Corporations protect owners
from liabilities.
7.2
Corporations
II. WHAT IS A
CORPORATION?
A. A corporation is a business
that is chartered, or
registered, by a state.
B. A corporation legally
operates apart from its
owner or owners.
7.2
Corporations
III. C-CORPORATIONS
The C-corporation protects an
entrepreneur from being sued
for all debts of the
corporation.
7.2
Corporations
IV. C-CORPORATION
ADVANTAGES
A. A C-Corporation can raise
money by issuing shares of
stock.
7.2
Corporations
1. Common stock holders
have voting rights.
2. Preferred stock owners
also receive their
investment back first in
case of business failure.
7.2
Corporations
B. A corporation also offers its
owners, or shareholders,
limited liability. The owners
are only liable up to their
individual investments.
7.2
Corporations
C. Corporations can create
pension, retirement, and
profit sharing plans.
7.2
Corporations
V. C-CORPORATION
DISADVANTAGES
A.
B.
It can cost between $500
and $2,500 in fees to create
a C-corporation.
Corporate income is heavily
taxed.
7.2
Corporations
VI. SUBCHAPTER S
CORPORATIONS
A Subchapter S corporation is
taxed like a sole
proprietorship or partnership.
7.2
Corporations
VII. NONPROFIT
CORPORATIONS
Nonprofit corporations are
legal entities that take money
for reasons other than the
owners’ profit.
7.2
Corporations
A. Charity
B. Public benefit
C. Religion
D. Mutual benefit
7.2
Corporations
VIII. LIMITED LIABILITY
CORPORATIONS
LLCs benefit from the
limited liability of a
corporation and the tax
advantages of a partnership.
7.2
Corporations
End of Section 7.2