The development of corporations has turned out to be a great
boon for American as well as world economy. Basically a
corporation is understood as a lawful body that entitles a group
of people to act as unit or an individual. But since past few
decades a new dimension is given to the term corporation.
Corporation now refers to both profit and non-profit businesses
that are identified or classified according to their tax
structure. Corporations are taxed differently, not like normal
businesses. On the basis of taxation, corporations are divided
into two categories- C- corporations and S-corporations.
C-corporations are those that are required to pay income taxes
and to kill or finish the deductions on dividends paid to
stockholders. C-corporations comprises of the companies that are
publicly traded on stock market. The C-corporations are quite
common and dominant nowadays. While small businesses and
businesses with sole proprietors fall in the S-corporations
category. The S-corporations do not pay any corporate taxes.
Here all the gains and losses so incurred are directly passed to
the private stockholders who then adjust their personal income
taxes according to it.
The corporations that are largely prevalent these days are the
public corporations. These corporations are owned by a set of
stockholders who purchase stocks that are traded in brokerage
houses. The owner/s seeks the report from the individuals
running the corporation. The public corporations move ahead on
the decisions taken by the members Board of Directors. The
members of Board of Directors are appointed or voted for by the
stockholders. These members are elected on the basis of their
qualifications. They are usually eminent people in different
fields such as business, politics or academics. The members of
the Board of Directors in turn appoint a Chairman who is the
highest governing body in the management structure.
A large part of a corporation 's management system comprises of
the people who run it on regular basis. At the top of the
hierarchy are 3 people, the CEO i.e. the Chief Executive
Officer, the COO or Chief Operating Officer and the CFO, the
Chief Financial Officer. The CEO is the in-charge of the overall
business operations while the CFO takes care of the finances of
the corporation. The COO governs the sales and production
activity and personnel. The CEO can also be the president of the
corporation whereas the COO and CFO, the vice-presidents of it.
Apart from discussion on definition and composition of a
corporation, it is important to have a notion of corporate
welfare. In the corporate sector, Corporate Welfare is the
buzzword these days. Corporate Welfare refers to the special or
preferential treatment and tax breaks for a corporation. There
are various ways to corporate welfares. The foremost is to
set-up an offshore office in a country that has lax tax laws.
Another way to corporate welfare is via setting up offices or
factories at many places and instigating communities into a
bidding war of tax breaks. Finally corporation welfare occurs
when a corporation is recovered from bankruptcy or huge debts
and major difficulties by the government.
However since corporation welfare occurs at the cost of local
citizens and small companies, it is the primary issue of concern
for the American government today. Though government is taking
concrete steps in this direction yet due to some corrupt
politicians, clandestinely corporate welfare is at a surge.
About the author:
Mansi gupta writes about
large corporations .
