What is a corporation?

Question

When owners designate a company as an entity.

A company with less than 100 owners.

When the owners of a company sell it to a larger company.

A company that makes more than 10 million dollars in profits.

Answer 1

A corporation is a legal entity that is separate and distinct from its owners, who are known as shareholders. It is created according to the laws of a state and can be designated as a company regardless of the number of owners. Corporations can raise capital by issuing stock, and their owners have limited liability for the debts and obligations of the business. Therefore, your options do not accurately define a corporation. The closest definition would be:

"A corporation is created when owners designate a company as a legal entity."

However, this definition lacks nuance because it does not encompass all aspects of corporate structure and regulation. The most basic characteristics of a corporation include limited liability for its shareholders, the ability to enter contracts, and the potential to raise funds through the sale of shares.