Characteristics of a Corporation:
- It requires to file documents with the Secretary of State to be authorized.
- It requires at least one owner called stockholder.
- The corporation is managed by a Board of Directors and company officers (President, Secretary, Treasurer, etc.).
- Each stockholder has limited liability and is only liable up to the amount of his contribution.
- The stockholders may have agreements between them about how to vote in the annual meetings and special meetings that are called.
- Profits and losses are first taxed at the corporate level at the rate then effective and later at the dividend level when distributions are made to the stockholders, This means that corporate income is taxed twice.
- If the corporation elects tax treatment under Sub-Chapter S of the Tax Code, then the stockholders’ income be flow through directly through the stockholders and avoid having to be taxed twice on the same income. However, this election is not available if the Corporation has foreign residents as stockholders.