The following are brief definitions of a Corporation. I intend to follow this post with information on other legal entities.
What Is A Corporation?
A corporation is a legal entity created by statute that has all the rights privileges and responsibilities of a natural person. In the eyes of the law a corporation is treated as if it were a natural person. It can open bank accounts, conduct business, and be sued just like you and me.
A corporation possesses attributes of limited liability (i.e. protects its owners from lawsuits), centralized management, continuity of life (i.e no set expiration period) and free transferability of interest (i.e. stocks, etc.).
There are different types of corporations. For small businesses, you may want to look into setting up an S-Corporation.
What Is A For-Profit Corporation?
A For-Profit Corporation is a corporation created for the purpose of conducting business in the broadest sense of the term. Its main purpose is to make money for those who own the business. The one restriction placed on a For-Profit Corporation is that the business it conducts must be legal. In other words, setting up a For-Profit Corporation to run a drug ring will not protect the corporations owners. Sorry Mob Bosses.
What Is A Non-Profit Corporation?
A Non-Profit Corporation is a corporation normally thought of as one created for religious, charitable or educational purposes. A Non-Profit Corporation is not precluded from engaging in a profit making situation. In fact, a Non-Profit Corporation is not necessarily a charitable corporation or one that is tax exempt. They are simply corporations that may not distribute their income to a member, director or officer.