Understanding Corporations

What is a corporation?

• A small shop owned by one person

• A business that is separate from its owners

• A group of friends who run a business together

• A type of family business

Which of these is a good thing about a corporation?

• Owners must pay the company’s debts

• It is very easy to start

• Owners are not responsible for business debts

• Owners manage the business directly

Who owns a corporation?

• The government

• The manager

• Shareholders (people who own shares)

• The workers

What does "limited liability" mean in a corporation?

• Owners must pay for all business debts

• Owners only lose the money they put into the business

• There is no limit to how much money owners can earn

• Owners have to work in the business

One bad thing about a corporation is:

• Owners must pay for debts

• The company’s profits get taxed twice

• Owners don’t make any money

• It is hard to find workers

Which is a key feature of a corporation?

• It is owned by only one person

• It has unlimited liability

• It is separate from its owners

• It has only a few workers

What is a disadvantage of forming a corporation?

• It is very risky for owners

• There are more rules and regulations

• It is hard to start

• Owners must run the company themselves

How do corporations get money?

• By taking loans from employees

• By asking for donations

• By selling shares to the public

• By raising product prices

What happens to a corporation's profits?

• They are given to workers

• They are only taxed once

• They are taxed twice: once by the company and once by shareholders

• They are not taxed at all

What is a benefit of being a shareholder in a corporation?

• You have to manage the business

• You don’t have to pay the company’s debts

• You control the whole company

• You have to work there