Accounting All-in-One For Dummies (+ Videos and Quizzes Online), 3rd Edition

Chapter 2

Incorporating Your Business

IN THIS CHAPTER

Structuring the business to attract capital

Taking stock of the corporate legal structure

Issuing and managing stock shares

From the perspective of an investor, the obvious reason for investing in a business rather than putting money in a safer type of investment is the potential for greater rewards. As a partial owner of a business, you’re entitled to a partial share of its profit. On the other hand, you’re subject to the risk that the business could go down the tubes, taking your money with it. In an ideal scenario, sales would be amazing, but even then, some claims to the profits may rank higher than yours. Owners of preferred stock will get their share before owners of common stock, and holders of corporate debt, such as bond owners, will get their piece before anyone else.

This chapter shows how legal structure changes the very nature of who owns the company, how the company is funded and managed, and even whether your company has a legal rights through the concept of corporate personhood.

Securing Capital: Starting with Owners

Every business needs capital. Capital provides money for the assets a business needs to manufacture ...