Business Loan Glossary: Key Terms Every Small & Medium-Sized Business Should Know
Navigating the world of business loans can be complex, especially for small and medium-sized businesses. Our comprehensive business loan glossary is here to help. Whether you're applying for a loan or managing finances, understanding key terms is crucial to making informed decisions. Explore definitions, explanations, and expert insights to simplify your business loan journey and empower your financial growth.
What is a Corporation (C-corp)?
A corporation, also known as a C-corp, is like a legally recognized business entity with its own set of rights and responsibilities.
A corporation, also known as a C-corp, is like a legally recognized business entity with its own set of rights and responsibilities. It's kind of like giving your business its own personality and identity separate from the people who own it.
Think of it as creating a new person, but instead of flesh and blood, it's made up of legal documents and regulations. This "person" can do things like own property, enter contracts, and even sue or be sued in its own name.
One of the biggest perks of a corporation is limited liability. This means that the owners, or shareholders, are only liable for the debts and obligations of the corporation up to the amount they've invested. So, if the corporation goes belly-up, the shareholders' personal assets are generally protected.
Another defining feature of a corporation is its ability to issue shares of stock, which represent ownership in the company. These shares can be bought, sold, and traded on the stock market, making it easy for investors to get in on the action.
Finally, a corporation is like a perpetual motion machine—it can keep on chugging along even if the original owners decide to sell their shares or leave the company. This "going concern" status means that the corporation can live on indefinitely, as long as it continues to meet its legal and financial obligations.
So, if you're looking to start a business and want the legal protections and flexibility that come with being a corporation, the C-corp might be the way to go. Just remember, with great power comes great responsibility!