Corporations – What you need to know about Corporations
One of the most preferred ways to start and run a business is registering a corporation. Unlike sole proprietorship and business partnerships, corporations are different in legal aspects. They are independent legal entities and their owners are not connected legally to the corporation. As a result, corporations are responsible for themselves for handling their lawsuits, taxes and assets. The owners do not represent the assets and taxes applied to their respective corporation.
A Corporation has owners, officers, shareholders, directors, all of whom run the corporation. However they have limited responsibility pertaining to the corporation. Legally, these people are not held responsible when it comes to the corporation’s legal obligations including taxes and assets the exception being taxes which are collected on behalf of Revenue Canada or other agency for example sales tax, payroll deduction, WSIB deductions for which directors can be responsible but in any event shareholders are not responsible. So, it is vital to add words such as Incorporation, Limited or Corporation to the name of the corporation. This can be done in abbreviated form as well. Such a name signifies that the owners do not have any legal binding or responsibility in the matters pertaining to the corporation.
Corporations are independent in their operations. Legally, it is an entity in itself. Shares are issued to the public and shareholders can purchase these shares. There are some limitations for Private Corporation on issuing shares to public. Thus, such shares represent the connection between the shareholder and the corporation. They are like part owners of the corporation. Also, these shares can be transferred among individuals provided there is no restriction on the share transfer.