For-Profit Corporations-The “C” and “S” Configurations
Once upon a time in America, corporations were short-lived and task specific. They began as humble servants. Some of the language in the following historical takeoffs may be almost intolerable with the histrionics at times, but feel free to gather as much information as possible from a few of these: Wikipedia’s article, “Corporation”, The Corporate Resource Guide, “Our Hidden History of Corporations” and “The Story of Stuff”
For-profit corporations come in several styles, but they have one thing in common: they make money for their owners and their shareholders. A company may have begun with one man with an idea just as John D. Rockefeller did when he spread his concept papers before Cornelius Vanderbilt, “The Commodore”, in the age of great industrialists. Every enterprise needs financing to exist. “C” and “S” corporation get financing from people willing to gamble on the company’s success; to put up the necessary with the promise of getting “a piece of the action” in return for their wager when the company makes money. Then, the governments gets its “piece”: anything a shareholder’s “share” earns is considered taxable income.
Using an excellent article on about.com as a source, here is a very clear explanation of what “C” and “S” corporations are:
“…C-Corporations are incorporated businesses. The shareholders of C-corporations have limited liability protection, and corporations have full discretion over the amount of profits they can distribute or retain. Corporations are presumed to be for-profit entities. Corporations must have at least one shareholder.
S-Corporations are a type of corporation. The shareholders of S-corporations have limited liability protection, and the corporations has full discretion over the amount of profits they can distribute or retain. An S-corporation must have at least one shareholder, and cannot have more than 100 shareholders. The net income of the S-corporation is imputed as income to the shareholder, even if the S-corporation decides to retain some or all of the net income…”
So, someone with an eye for a profitable idea like J.P.Morgan, buys into an inventor’s idea, then convinces friends to come on board to put up financing. The inventor, with the industrialist’s support group’s help, produces product; the product gets distributed. Ba ta-bing!-ba ta-bang! Gas lighting is dead and the first electrical power grid lights up New York City. The sponsor industrialist makes money; the investors make money; (hopefully) the inventor makes money. It can happen in America.
- Editorial: Most of Our Founding Fathers Warned Against the Undue Influence of Corporations (wealthshare.wordpress.com)
- Is a B Corporation Right for Me? (grasshopper.com)
- Shareholders Agreement 101 (paulslaby.com)
- The (cough) ‘Grand Bargain’ – ‘Tax Holiday for Overseas Corporate Profits Would Increase Deficits, Fail to Boost the Economy, and Ultimately Shift More Investment and Jobs Overseas’ (thelastofthemillenniums.wordpress.com)
- The ABCs of LLCs, Taxes and Small Business Regulations (staples.com)
- Benefit corporations: can investors have their cake and eat it? (theguardian.com)