Corporation

Definition: A corporation is a legal entity created by one or more persons.  This entity offers limited liability status that prevents the owners from being personally responsible for the debts of the company.  A corporation also has the ability to issue stock to its owners.  The act of forming a corporation is known as "incorporating."

TeenAnalyst Advice: If you're thinking about forming a corporation, it's important to know all the advantages and disadvantages.  For example, corporations are double-taxed, which means that when the company makes money, it has to pay a corporate tax.  After it has paid a corporate tax, the owners have to pay an income tax on their share of what's left over.