Business Scenario

Type of Business

Andrew started a tutoring website. After a few months, a publishing company filed a lawsuit against his company for copyright infringement. Andrew had to shut down his business and lost all his personal assets in the process.

Purple Consulting has five consultants in the firm. The company$$s annual revenue is around $$500,000.$ Income is distributed among all consultants, and each is personally liable for claims if the company goes under.

Caesar, the CEO of a beverage company, is required to certify the accuracy of information provided in the company$$s quarterly reports.

Paradigm Media is a company run by a group of new media professionals. The owners of the company do not have any personal liability and file taxes based on individual income.

Businesses in the form of corporations offer their owners several advantages, but the benefits come at a price. For instance, corporations are required to create a charter, set bylaws, and file mandatory reports with state and federal authorities, which can get expensive and time consuming.

The filing document, which includes a set of rules created by the founders of the corporation such as: $(1)$ directors$$ election process, $(2)$ terms of the directorial position, $(3)$ whether the existing stockholders will have the first right to buy new shares the firm issues, and $(4)$ procedures to amend the bylaws, and so on$,$ is called the corporate $.$