Transcript:
Ira Gubernick:
The three most common forms of business entities are corporations, partnerships, and limited liability companies. In this video, we're discussing corporations. Many emerging companies form as corporations. The key features of a corporation are that it's owners, called stockholders, are not personally liable for the debts of the corporation. If the corporation has profits, those profits are taxed at the corporate level. If the corporation later distributes money to its stockholders, the stockholders pay tax on those distributions. This is commonly referred to as double taxation.
The governing documents of a corporation are its articles of incorporation, bylaws and often a stockholders, agreement. Certain private equity funds, that have institutional investors as well as incubator companies, will only invest in corporations.A corporation can issue equity to its employees, in the form of stock options. If you have questions or would like to learn more about corporations and other issues facing startups and emerging growth companies, visit us at cozen.com/copilot.
