The Standard Corporation

A standard corporation is what you think of when you think of big companies. Ford, General Motors, Microsoft, MacDonalds. You can tell them if they say Corporation, or Corp., or Inc. Ltd, which is British. We can call our companies LTD as well, though whenever I see it I think ask, "limited to what?" I don't want anyone to think my business is limited to anything.

Here's what Investorwords.com says:

The most common form of business organization, and one which is chartered by a state and given many legal rights as an entity separate from its owners. This form of business is characterized by the limited liability of its owners, the issuance of shares of easily transferable stock, and existence as a going concern. The process of becoming a corporation, call incorporation, gives the company separate legal standing from its owners and protects those owners from being personally liable in the event that the company is sued (a condition known as limited liability). Incorporation also provides companies with a more flexible way to manage their ownership structure. In addition, there are different tax implications for corporations, although these can be both advantageous and disadvantageous. In these respects, corporations differ from sole proprietorships and limited partnerships.This content can be found on the following page:http://www.investorwords.com/1140/corporation.html.

Corporations are easier to set up than they used to be. And they have the alleged advantages of limiting your liability and protecting you against suits. This is true or is not.

Fraud-nothing protects you against that, and there's no time limit. If you committed it 40 years ago you can still be prosecuted.

The corporate "veil" doesn't necessarily protect you against creditors either. Anyone who sues your corporation is going after the deepest pockets. If your corporation is small with few assest, they're coming after the owners because the owners were acting in the interest of the corporation.

The corporate "veil" doesn't necessarily protect you against financial default. If your corporation needs money, and doesn't have much for collateral, anyone lending you money is going to require you to personally guarantee the loan with your personal assets. As my lending officer told me once, "If National Research Services, Inc., [my start-up at the time] defaults on this loan, how can I get my money back? But if Tim Bosworth defaults, I know he can probably get a job and pay me back."

So in the case of small corporations, there isn't an easy way to protect yourself other than sound business practices such as maintaining good credit, developing abundant positive cash flow, having appropriate insurance, exhibiting transparency in all business dealings, and so on.

One definite marketing advantage of a standard corporation: that "Inc" after your company name gives you in some eyes a platform of credibility unmatched by any of these other forms. In short--you look like a real business. And that inspires trust.

What do you think of this? The goal is to produce more skilled entrepreneurs.
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Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.