Corporations
Corporations are the most complicated form of business ownership. Remember, while it is more complex, it provides safeguards that sole proprietorships and partnerships do not. Read this section to learn about the most common type of corporation, the C Corporation. You'll also learn some important information about purchasing ownership in a publicly traded corporation in the form of stocks.
Ownership and Stock
Corporations are owned by shareholders who invest money in the business by buying shares of stock. The portion of the corporation they own depends on the percentage of stock they hold. For example, if a corporation has issued 100 shares of stock, and you own 30 shares, you own 30 percent of the company. The shareholders elect a board of directors, a group of people (primarily from outside the corporation) who are legally responsible for governing the corporation. The board oversees the major policies and decisions made by the corporation, sets goals and holds management accountable for achieving them, and hires and evaluates the top executive, generally called the CEO (chief executive officer). The board also approves the distribution of income to shareholders in the form of cash payments called dividends.