History

• Corporations of various kinds have been around for centuries, although the laws governing them vary widely. The British East India Tea Company was the financial impetus for global exploration (and much exploitation) through the 17th and 18th centuries.
  
  

Significance

• Incorporation shields business owners and stockholders from liabilities held by the company itself (but not from individual actions, such as negligence or fraud). This allows entrepreneurs to start risky new businesses, without necessarily risking all of their personal assets in the event of failure. The theory behind corporate law is to encourage the common good of new business generation, while balancing the risks and rewards these entities create.
  
  

Types

• The traditional corporation, such as those publicly traded on the New York Stock Exchange, is called a C-Corporation, named after the subchapter of the tax code that created it. An alternate kind is the S-Corporation, which has weaker separations between itself and its owner for tax purposes, and greater restrictions on corporate activities such as issuing stock. A Limited Liability Company combines some of the features of corporations, with other business structures commonly found in partnerships.
  
  

Time Frame

• A corporation, once created, is persistent over time, and will exist as a legal entity until it is dissolved by its owners, or through legal action by a government or a court.
  
  

Features

• Incorporation of a business is distinguished primarily by the kinds of protection it provides the owners, and the tax laws that apply to their income and profits. The choice of a particular corporate form is usually driven by finding the legal structure that will minimize taxes and legal expenses, based on the business the owners expect to conduct.
  
  

Size

• The largest corporation by revenue in the world, as of 2009, is Royal Dutch Shell. It is based in the Netherlands, has 102,000 employees and revenues of $458 billion. The largest American incorporated companies are Exxon Mobil (104,700 employees, $442 billion revenue) and Wal-Mart (2.1 million employees, $405 billion revenue).
  
  

Misconceptions

• A business does not need to be incorporated in order to have a large economic impact. Sole proprietorships collectively made $975 billion in revenue in 2005; partnerships came in at over $2 trillion.