A Corporation is a legal entity separate and apart from its owners that is created to do business and owned by shareholders. The shareholders of the Corporation elect a board of directors. The board of directors of the Corporation is responsible for setting major goals of the corporation and making major corporate decisions. The board of directors appoints the officers of the Corporation, who generally include a president, one or more vice presidents, a secretary and a treasurer. The officers of the Corporation run the business on a day to day basis.
Corporations are entities that are formed under state law by filing articles of incorporation with the secretary of state and subject to state regulation. A corporation formed in Idaho and doing business in Idaho will file the corporation’s articles of incorporation with the Idaho secretary of state. In addition to filing the articles of incorporation, the shareholders will create a set of corporate bylaws, pay filing fees, obtain a tax payer identification number for the corporation, register for the corporation to do business with any applicable federal and/or Idaho and other state agencies and file annual reports with the Idaho secretary of state.
Am Idaho corporation that is incorporated in Idaho must file to do business with the secretary of state in each and every other state it does business in. If an Idaho corporation desires to do business under a name other than the one the corporation is registered under, the corporation will need to file a DBA (doing business as) with the Idaho secretary of state.
A corporation involves more regulatory oversight, record keeping, accounting and tax services than other business structures, such as sole proprietorships, general partnerships, limited partnerships and limited liability companies. In exchange for more regulatory oversight the shareholders of a corporation enjoy limited liability protection; that is, in most cases, creditors of the corporation cannot reach shareholder’s non-business assets. Because a corporation can sell stock to fund raise, it can be easier to obtain business investors and loans. Corporations are taxed at the federal and state tax level, and then any earnings distributed to shareholders are again taxed to the shareholders. A separate tax return for the corporation must be filed; this is usually accomplished by using Form 1120. This double taxation can be a drawback of the corporate business structure, but note that if certain requirements are met, a corporation can elect to be taxed as an S corporation, and income and losses can be passed on to shareholders to report on their individual tax returns and thus not subject to double taxation.
