Debitoor's accounting dictionary

Corporation - What is a corporation?

A corporation is a body of persons authorized by law to act as one person, and having rights and liabilities distinct from the individuals who are forming the corporation

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Corporations are legal entities that have been created by the Royal Charter, state or common law. These entities are established as separate legal bodies from their members - having their own distinct privileges and liabilities.

Corporations can be found in many forms, but most are used to conduct business. The most important type of corporation is the registered company statute, or common law. Corporations also pay corporation tax in the UK.

Features of corporations

There are four core characteristics that typically define a business corporation:

  • Transferable shares
  • Centralised management under a board structure
  • Limited liability
  • Legal personality

Limited liability

One critical feature of contemporary corporations is their limited liability. This means that in the case of the corporation failing, shareholders stand only to lose their investment and employees stand only to lose their jobs – as opposed to also being further liable for debts still owed to the corporation's creditors.

Legal personality

By law, corporations are recognised as having rights and responsibilities, as natural persons ("people"). This means that corporations can exercise human rights against real individuals and the state, and they can be held responsible for human rights violations. They can even be found guilty of criminal offenses, such as fraud and manslaughter.

Theoretically, corporations are conceptually immortal. However, in the case of a corporation being dissolved, they can can ‘die’.

Corporations and Debitoor

Debitoor is an online accounting and invoicing solution where routine tasks are automated so you have more time to concentrate on your business and on the needs of your clients.

It offers a wide array of features that allow your business to operate more efficiently and streamline your accounting and invoicing tasks.

Learn more about the functions available in Debitoor.

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