corporation

noun cor·po·ra·tion \ ˌkȯr-pə-ˈrā-shən \
Updated on: 13 Oct 2017

Definition of corporation

1 a :a group of merchants or traders united in a trade guild (see guild 1)
b :the municipal authorities of a town or city
2 :a body formed and authorized by law to act as a single person although constituted by one or more persons and legally endowed with various rights and duties including the capacity of succession
3 :an association of employers and employees in a basic industry or of members of a profession organized as an organ of political representation in a corporative state
4 :potbelly 1

Examples of corporation in a Sentence

  1. He works as a consultant for several large corporations.

  2. a substantial corporation that showed that he was a sucker for all-you-can-eat buffets

Recent Examples of corporation from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'corporation.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

Origin and Etymology of corporation


Financial Definition of CORPORATION

corporation

What It Is

A corporation is one of many ways to formally organize a business. Structuring a business as a corporation has a number of important legal requirements and consequences that impact investors.

How It Works

A corporation is also sometimes referred to as a "C Corp." The "C" refers to the section of the IRS code that governs corporate taxes. Corporations have several distinguishing characteristics:

1. A corporation is owned by shareholders, and their ownership is represented by shares of stock.
2. A corporation has a board of directors, which is a group of people elected by the shareholders to oversee the corporation's management. The board of directors is elected to make decisions that are in the best interest of the shareholders.
3. A corporation has an unlimited life; that is, corporations don't die or expire unless a) the shareholders decide to intentionally dissolve the corporation or b) a corporation is unable to pay its debts and is forced into bankruptcy.
4. Shareholders have limited liability. That is, the liabilities of the corporation do not extend to the shareholders. If the corporation goes bankrupt or defaults on a loan, lenders cannot repossess shareholders' personal assets or try to force shareholders to repay the company's debts.
5. Corporations pay taxes on their income, even if they distribute some of that income directly to the shareholders via dividend payments. This leads to the controversial "double taxation."
6. Corporations are legal entities that exist separate and apart from their shareholders. In fact, they are usually afforded the legal rights of an individual person. That is, they can own assets, borrow money and sue or be sued.

Why It Matters

It's important to understand the characteristics of corporations because if you have money in the stock market, you are a shareholder and part owner of the corporations whose stock you own.

Corporations are the most popular form of business structure in the U.S. because of the limited liability protection. If the corporation can't pay back its loans, your shares will lose value (perhaps 100% of their value), but you as a shareholder are not responsible for paying back the debts. A shareholder cannot lose more than 100% of his or her investment.

If the corporation makes a profit, your shares in that company will become more valuable because as a shareholder, you're entitled to your portion of the net income. In fact, one of the main goals of a corporation's employees is to maximize shareholder value; that is, to work on behalf of the owners in order to enrich them as much as possible.

The corporate structure is not appropriate for every business. Corporations are highly governed, regulated and taxed when compared to other business forms (sole proprietorships or partnerships). This makes them more expensive to operate and conduct business. One of the largest complaints about the corporate structure is that profits are taxed twice: the corporation must pay income taxes and shareholders must pay income taxes on that same income if they receive a dividend payout (double taxation).


CORPORATION Defined for Kids

corporation

noun cor·po·ra·tion \ ˌkȯr-pə-ˈrā-shən \

Definition of corporation for Students

:a business or organization authorized by law to carry on an activity with the rights and duties of a single person

Word Root of corporation

The Latin word corpus, meaning “body,” and its form corporis give us the root corp or corpor. Words from the Latin corpus have something to do with the body. Corporal is an adjective describing something that has to do with a person's or animal's body. A corporal is a military officer who leads a body of soldiers. A corporation is a body, or group, of people who run a company. A corpse is a dead body.

Law Dictionary

corporation

noun cor·po·ra·tion \ ˌkȯr-pə-ˈrā-shən \

legal Definition of corporation

:an invisible, intangible, artificial creation of the law existing as a voluntary chartered association of individuals that has most of the rights and duties of natural persons but with perpetual existence and limited liability — see also pierce — compare association, partnership, sole proprietorship
benefit corporation
:a for-profit corporation whose purpose is to provide a benefit to society (such as improving the environment or promoting good health) in addition to making a profit for shareholders called also B corporation, public benefit corporation
C corporation
:a corporation that pays taxes as a corporate entity — compare S corporation in this entry
Note: A corporation that does not choose to be an S corporation under the Internal Revenue Code is a C corporation.
close corporation \ˈklōs-\
:a corporation whose shares are held by a small number of individuals (as management) and not publicly traded; specifically :small business corporation in this entry called also closely held corporation ; compare public corporation in this entry
foreign corporation
:a corporation organized under the laws of a state or government other than that in which it is doing business
government corporation
:public corporation in this entry
moneyed corporation
:a corporation (as a bank) authorized to engage in the investment, exchange, or lending of moneyed capital
municipal corporation
:a political unit created or otherwise given corporate status (as by a charter) by a superior governing authority (as a state) and endowed with powers of local self-government (as eminent domain); broadly :a public corporation (as a utility) created to act as an agency of administration and local self-government
Note: As a result of its incorporation, a municipal corporation has the capacity to sue and be sued. Citizens as well as officials are usually considered part of a municipal corporation.
professional corporation
:a corporation organized by one or more licensed individuals (as a doctor or lawyer) to provide professional services and obtain tax advantages
public corporation
1 :a government-owned corporation (as a utility or railroad) engaged in a profit-making enterprise that may require the exercise of powers unique to government (as eminent domain) called also government corporation, publicly held corporation
2 :a business corporation whose stocks are publicly traded called also publicly held corporation; compare close corporation in this entry
S corporation
:a small business corporation that is treated for federal tax purposes as a partnership called also subchapter S corporation; compare c corporation in this entry
shell corporation
1 :a corporation that exists as a legal entity without independent assets or operations as an instrument by which another company or corporation can carry out dealings usually unrelated to its primary business
2 :a corporation formed for purposes of tax evasion or acquisition or merger rather than for a legitimate business purpose
small business corporation
:a corporation described in section 1361 of the Internal Revenue Code that has 35 shareholders or less and only one class of stock and that may if eligible elect to be an S corporation and taxed accordingly
subchapter S corporation
:s corporation in this entry

Origin and Etymology of corporation

Late Latin corporatio, from Latin corporare to form into a body, from corpor-, corpus body


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