Agriculture Reference
In-Depth Information
In 2006, there were only about 5.8 million corporations in the United States, or about 19
percent of all businesses. However, they generated about 83 percent of all business receipts.
Many corporations are multinational giants. The 500 largest corporations, as rated by Fortune
magazine, generate two-thirds of all industrial sales in the United States. However, most cor-
porations are relatively small, and many are really one-person businesses whose owners have
chosen the corporate form of organization as the best for their unique business circumstances.
As a matter of fact, in 2006, 81 percent of all United States corporations had annual receipts
of less than $1 million ( www.census.gov/compendia/statab/2010/tables/10s0729.pdf ) .
Nonprofi t corporations
Most corporations are formed for profi t-making purposes; however, there are thousands of
nonprofi t corporations in existence. These nonprofi t corporations embrace many areas of
activity, including those of religious, governmental, labor, and charitable organizations.
Federal and state laws specify the numerous forms that these nonprofi t corporations may
take, along with very specifi c regulations as to their purpose and operation. A competent
attorney can advise whether a nonprofi t corporate form of organization is the most appropri-
ate for a particular agribusiness situation. Again, the legal interpretation will be made on
the basis of the ways in which the corporation acts, and not on the basis of how it is described
in written legal documents.
Examples of nonprofi t corporations include some cooperatives, some agricultural trade
and research groups, and some farm organizations, such as the National Dairy Herd
Improvement Association, Inc. Nonprofi t corporations are exempt from certain forms of
taxation, and generally they cannot enrich members fi nancially. In many cases, the nonprofi t
corporation must secure a formal exemption from paying corporate income taxes.
The nature of the corporation
The corporation as we know it today is a rather recent innovation compared to proprietor-
ships and partnerships. The early American colonists were very suspicious of this form of
organization, and it was not until the 1860s that most states provided laws allowing for the
formation of corporations. A corporation can own property, incur debts, and be sued for
damages, among other things. The important distinction to remember is that the owners
(stockholders) and managers do not own anything directly. The corporation itself owns the
assets of the corporation.
Forming a corporation requires strict adherence to the laws of the state in which the busi-
ness is being formed. Usually, one or more persons join together to create a corporation. A
series of legal documents must be created and examined by the state's designated depart-
ment for establishing corporations. If the legal formalities are in proper order, and if the
proper fee for incorporation has been paid, a charter authorizing the applicants to do business
as a corporation is issued. Additionally, a corporation maintains the following legal docu-
ments: articles of incorporation , which are fi led with the state and which set forth the basic
purpose of the corporation and the means of fi nancing it; the bylaws , which specify such
rules of operation as election of directors, duties of offi cers and directors, voting procedures,
and dissolution procedures; and stock certifi cates or shares detailing amounts of the owners'
investments.
The laws relating to the formation of proprietorships and partnerships are fairly well
established and uniform throughout the nation, but considerable differences in the requirements
 
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