Understanding the Corporate Structure

To many, the word corporation evokes thoughts of multi-national firms that are traded on Wall Street. While this is certainly the case for some of our nation’s most successful corporations, there are many more corporations that are successful in their own right which are family owned or local small businesses. The term Corporation refers to a specific business structure which is recognized throughout our nation as a separate legal entity. This concept and other attributes of this structure often make the corporation a mysterious and misunderstood aspect of entrepreneurship… especially small business. It is my goal to help clear up some of the misconceptions associated with Corporations.
 
First a bit of history, the grandfather of the modern corporation was the British owned Virginia Company of 1606, followed by the Plymouth Company of 1607. Once the “New World" (America) was discovered, the economic possibilities were quickly realized. However, before the first profits could ever be made an entire ocean had to be crossed, land had to be acquired and sustained, crops had to be grown and harvested, the crops had to be sold or traded and the profits had to be shipped back to England. Each of these objectives came with its own risk, and the cost of failure was enough to bankrupt the wealthiest of nobles in England. So to diminish the threat of bankruptcy for any one individual, the wealthy British nobles created these companies which spread the risk out evenly among its members (the equivalent to today’s shareholders). The company’s also spread out the profit potential among the members. The result was a stronger company backed by a group of wealthy individuals who each held a piece of the company that was proportionate to the amount of money (or principal) they invested in the company. This proportion along with prospective future of the company is sometimes referred to as the cost/benefit or risk/reward ratio.
 
Today’s corporations follow the same concept; however, our government has extended additional privileges to the corporate structure. These include, tax benefits and liability protection among others. Another difference is that you do not have to have a large group of people to create a corporation. In many states you only need one or more person or entity to create a corporation. Others require two or more. And the corporation does not have to be engaged in for-profit activities. If you want to create a charitable organization the first major step is to become organized as a corporation. At www.alhlegal.com this is an area of expertise. Our clients include profit and nonprofit organizations, and unlike other online services we provide complete solutions to your need. We understand that new businesses and organizations create new jobs in communities throughout our great nation. So we passionately pursue our goal of helping every entrepreneur in America achieve their goals. So if you are interested in starting a new business or if you want to restructure an existing business, A Little Hospitality is all you need to succeed.

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