This is Bob Doughty with the VOA Special English EconomicsReport.

Last week, we discussed ways that many small businesses areorganized. This week, we examine the structure of big business. Themost complex is the corporation. This kind of business organizationis designed to have an unlimited lifetime.

Investors in a corporation own stock. This is a share of theownership. Investors can trade their shares or keep them as long asthe company is in business. Investors may get paid dividends, asmall amount of money for each share they own.

A corporation is a legal entity, a being separate from itsowners. Shareholders are not responsible for the debts of thecorporation. Shareholders can only lose the money they invest instock. The corporation itself is responsible for its debts.

A board of directors controls the corporate policies. Thedirectors appoint top company officers. The directors might or mightnot hold any shares in the corporation.

United States tax law recognizes two general kinds ofcorporations. The first is known as the C corporation. Ccorporations were the only kind for many years. Most pay taxes ontheir profits. Shareholders also pay taxes on dividends theyreceive. Some people call this "double taxation."

So, in nineteen-eighty-six, the government created the Scorporation. An S corporation is not taxed by the federalgovernment. It is like a partnership. It can pass its profits andlosses on to its owners. But S corporations cannot have more thanseventy-five shareholders. There are other restrictions as well.

The federal tax agency is the Internal Revenue Service. It saysthat in two-thousand, about fifty-seven percent of corporations inthe United States were S corporations. Their number has grown eachyear since the start. Yet they control only a small part of thevalue of all corporations.

Not all corporations are traditional businesses that sell stock.The American Red Cross, for example, is organized as a non-profitcorporation.

Corporations can be huge or not so huge. They may have a fewmajor shareholders. Or the ownership may be spread widely among thegeneral public. Incorporating offers a way for businesses to gainthe investments they need to grow. It also offers a way for theinvestors to limit their responsibility.

This VOA Special English Economics Report was written by MarioRitter. This is Bob Doughty.