Commercial Corporations
A commercial corporation is an organization that is engaged in business activities, usually for profit. A business corporation is a for-profit entity that exists to provide goods or services to consumers. The term ‘corporation’ comes from the Latin word corpus, which means ‘body.’ In the United States, business corporations are formed under state law. Each state has its own rules and regulations governing the formation of corporations. The most common type of business corporation is the C corporation.
In order to form a C corporation, the owners must file Articles of Incorporation with the state in which they intend to do business. The Articles of Incorporation must include the name of the corporation, the names of the incorporators, the corporate purpose, and other important information. Once the Articles of Incorporation are filed, the corporation is legally formed.
The owners of a corporation are known as shareholders. Shareholders elect a board of directors to oversee the operations of the corporation. The board of directors appoints officers to manage day-to-day activities. The three most common officers are the president, vice president, and treasurer.
The shareholders own the assets of the corporation and are liable for its debts. This limited liability protects shareholders from being held personally responsible if something goes wrong and the corporation is unable to pay its debts. However, shareholders may be held liable if they engage in fraudulent or illegal activity or if they fail to follow corporate governance rules.
