2015 07 01 | Category: Offshore Glossary

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The most common form of business organization. A corporation is a legal entity created through the laws of its state of incorporation and given many legal rights as an entity, separate from its owners. Characterized by the limited liability of its owners, the issuance of shares of easily transferable stock, and perpetual existence.

The law treats a corporation as a legal ‘person’ that has standing to sue and be sued, distinct from its stockholders. The legal independence of a corporation prevents shareholders from being personally liable for corporate debts.

Although corporations have a double taxation problem (both corporate profits and shareholder dividends are taxed), corporate profits are taxed at a lower rate than rates for individuals.