Understanding Business Law Concepts

Running head: BUSINESS LAW
1
Business Law
Name:
Institution:
Date:

BUSINESS LAW
2
Part A
Incorporation
This is a legal process that is used when a group of people come together to form a company
or a corporate entity. It therefore becomes a separate entity from its owners and is legal in its
own right. A corporation has its own obligations and rights and can be created anywhere in
the world with the use of the terms Inc or limited. They are the most common trading units in
the world and are used as vehicles to fasten the process of business. Although the legal details
of a corporation formation may differ in different jurisdiction, most of the elements in
corporations are very common.
Articles of Incorporation are the legal documents that are used in incorporations. In these
documents, the incorporated company name, purpose, location, class of shares and the
number of shares that are being issued is enlisted. It also involves registration information
and the fees(State business incorporation, 2009, 2011).
In creation of a company, shareholders are entitled to part of the profit a company makes.
Small companies may have a single shareholder while large publicly trading companies may
have thousands of shareholders. They usually receive the profits in form of dividends and
they also elect the directors of the company according to their preferences. The directors of
the company are directly involved in the day to day operations of the business but do not
carry any personal responsibility or liability incase the company falls into debts. However,
the exceptional cause would be tax fraud and evasion(State business incorporation, 2009,
2011).

BUSINESS LAW
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There are various advantages of incorporations
There are many advantages of incorporation for the owners and the business; they include
protection of owners’ assets as the company is responsible for its own debt. In many
countries, the tax processes for a limited liability company is much lower than personal tax
rates. There is also easy access to finance with sale of share stock being the most notable and
appropriate and easiest financing method.
Part B