Posts Tagged ‘corporations’

A Liability is…

Wednesday, October 6th, 2010

A liability is anything that an individual or organization owes to someone else. Liabilities can be salaries owed to employees, dividends owed to shareholders, taxes owed to the government, fixed or long-term debt such as bonds (which must be repaid with interest to the holder) or bank loans (which must be repaid with interest to the bank). Liabilities are the opposite of assets.

Why are so many companies incorporated in Delaware?

Friday, January 8th, 2010

More than half of the Fortune 500 companies are incorporated in the great, tiny state of Delaware; but how is this possible? Certainly most of these companies are not based in Deleware, but there are a number of reasons why a company would choose to become a corporation there:

  • Delaware is one of the states with the least expensive incorporating fees.
  • Whether you are a shareholder, officer, or director, you do not have to be a resident of Delaware.
  • Just because your company is incorporated in Delaware, that does not mean you actually have to do business in Delaware, and if you don’t do business there, then you do not have to pay the Delaware state corporate taxes.
  • In Delaware, one individual can have all the officer positions and be the only director, which is particularly advantageous to smaller business.

Basically, the laws in Delaware make it cheaper and easier for a company to be legally incorporated there than anywhere else. It is business friendly, plain and simple.

Cash Flow is…

Friday, August 21st, 2009

Cash flow is the amount of cash that is generated and used by a company over a certain period of time. It is calculated by adding any non-cash charges, such as depreciation expense, to the company’s net income after taxes.  This is why earnings and cash earnings are not always the same!

An Annual Report is…

Thursday, August 20th, 2009

An annual report is a written account of an organization’s financial progress over the past year and its projections for the future. The SEC requires public companies and mutual funds to give an annual report to their shareholders at the end of every fiscal year. Nonprofits also generally publish annual reports.

A Partnership is…

Wednesday, August 5th, 2009

A partnership is a group of at least two people who agree to share the profits and risks involved in running a business.

The Fortune 500 is…

Wednesday, July 29th, 2009

The Fortune 500 is a list, compiled annually by Fortune magazine, that ranks the top 500 US Companies by Gross Revenue.