Intro Material

Question 1

Who are the 3 main players in corporations?

Answer 1

1) Shareholders or stockholders: The owners of the corporation

2) Board of Directors: Group in charge of management of corp

3) Officers: Agents of corp appointed to carry out the corp’s policy

Question 2

True or False: Generally, shareholders, corporation’s directors, and officers are NOT personally liable for the obligations of the corporation.

Answer 2

True. Usually, these individuals are NOT personally liable

The owners risk only the investment that they make in the business to purchase their ownership interests (“shares”).

Question 3

How are corporations generally managed?

Answer 3

Generally, the right to manage a corporation is not spread out among the shareholders, but rather is centralized in a board of directors, who usually delegate day-to-day management duties to officers.

Question 4

How is a C corporation taxed?

Answer 4

A C corporation is taxed as an entity distinct from its owners.

Question 5

How is a S corporation taxed?

Answer 5

A S corporation is taxed like partnerships but yet it retains the other advantages of the corporate form.

Question 6

What is limited liability with regard to corporations?

Answer 6

Generally, shareholders are liable only to pay for their stock, not for corporate debts.