Question

What is the legal obligation of a corporation? Do you agree with this? Why or why not?

Answer 1

It refers to an organizational set up that function by a company or a group of people. It has the right and authority to act as a single business entity. There are numerous types of corporations and it has certain legal obligation and responsibilities to fulfill for efficient functioning in the long run.

One the corporation begins its directors must comply with all the legal formality for its efficient functioning. It must be able to maintain its status as a corporation. It is immensely necessary to maintain and keep financial records and must also file tax returns on time that allows a corporation to avoid unnecessary problems of the future. The carelessness of corporation results in failing in filling the civil suit.

There are certain legal formalities and legal obligation that a corporation must fulfill depending upon the nature and the form of corporation. They are as follows-

1. Taxes

It is important and necessary to acquire center and state tax identification numbers that allow the corporation to deal with the tax-related issue in a better and a hassle-free way. Filling income tax returns on time and maintaining a proper record of it for future needs.

2. Securities

      . Articles and security laws must be in mind while issuing such shares and securities. It must be in mind that a proper record of tax and dividends’ of shareholders is vital.

3. Bookkeeping

It is necessary to maintain the proper corporate books and accounts that are useful in ascertaining the profit and loss of the corporation. This includes maintaining ledgers and accounts of shareholders and stakeholders.

4. First Board Meeting

It is very important to hold the meeting of the board of directors of the corporation. This allows an organization to maintain the direction of a corporation.

5. Registration

It is very necessary to register the corporation with the state government as per the requirement of the law.

6. Following the Articles Of Incorporation

This is one of the important obligations of the corporation that enables a corporation to follows the policies and procedures of its articles and also protects the corporation from diversion towards the wrongful activities.