A business structure in the form of a “Corporation” may initially seem like it would only ever be used in circumstances where you were creating a large multi-million dollar company, but this is not the case.
Many of the businesses you deal with on a day to day basis are corporations. If you see the letters ‘Pty Ltd’ behind a business name then this is a corporation. The letters ‘Pty’ indicate it is a proprietary company. Any company that seeks to be limited by their shareholder liability must have the letters ‘Ltd’ behind their name.
Corporations or Companies must have at least one Director, one secretary, and one shareholder. The company rules are set out in the business constitution.
The director is the controller of the company and has a duty to the shareholders. The company is considered it’s own entity and if the company has issues financially then the shareholders liability is limited to the value of their shares and are somewhat protected financially. The director also is protected from liability unless the director has been found to be negligent, reckless or fraudulent.
A Company is created usually in circumstances where the business being carried on is higher risk.