?Describe the different classifications of corporations.

Question

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Answer 1

?How a corporation is classified depends on its purpose, ownership characteristics, and location.•A private corporation is, as the term indicates, a corporation that is privately owned.•A public corporation is formed by the government for a political or governmental purpose, as when a town incorporates. Note that a public corporation is not the same as a publicly held corporation.•A publicly held corporation is any corporation whose shares are or could be publicly traded in securities markets, such as the New York Stock Exchange.•Corporations may also be classified as either for-profit corporations or not-for-profit (or nonprofit) corporations. A not-for-profit corporation may be formed by a group-such as a charitable association, a hospital, or a religious organization-to conduct its business without exposing the individual owners to personal liability.•Corporations owned by a small group of shareholders, such as family members, are called close corporations, or closely held corporations. Unlike publicly held corporations,close corporations cannot sell their shares on public securities markets and usually place restrictions on the transfer of corporate shares-to keep the business in the family, for example, or for some other reason. State laws may provide more flexibility for close corporations, in terms of statutory formalities that must be observed, than for other corporations.•Certain close corporations are permitted to elect a special corporate tax status underSubchapter S of the Internal Revenue Code. These corporations are called S corporations.•Lawyers, physicians, accountants, architects, engineers, and other professionals sometimes incorporate as professional corporations.