Originally posted by AThousandYoung
When a corporation owns something, who is it that owns the thing?
Corporations invent imaginary people so they can collectively own things. Strange.
first a very simple definition,
The most common form of business organization, and one which is chartered by a state and given many legal rights as an entity separate from its owners. This form of business is characterized by the limited liability of its owners, the issuance of shares of easily transferable stock, and existence as a going concern. The process of becoming a corporation, call incorporation, gives the company separate legal standing from its owners and protects those owners from being personally liable in the event that the company is sued (a condition known as limited liability). Incorporation also provides companies with a more flexible way to manage their ownership structure. In addition, there are different tax implications for corporations, although these can be both advantageous and disadvantageous. In these respects, corporations differ from sole proprietorships and limited partnerships.
Read more: http://www.investorwords.com/1140/corporation.html#ixzz1PLtrvaxb
The only real difference that i can see, is that the liability of the owners (the creditors to the business) is in their legal standing in relation to the business and to those entities which the business itself is liable. When i was doing accounting for my own business as a sole trader, i really had a time grasping this concept, but once you understand that a business is a separate entity, while at the same time being liable to its owners in some manner, it became much easier. Its a strange relationship, the owners own the business, but the business functions as a separate entity, the owners merely become another form of creditor, which the business is liable to, for the distribution of profits.