The structure of corporation allows it to be owned by large numbers of individual (shareholders). This is significant, because it means that a corporation can use the public markets to be able to raise investment capital. As a result, some corporations have the potential to raise billions of dollars through the public markets using such financing methods. ("Definition of a Corporation")
Drawbacks
There are number of different drawbacks of corporations the most notable would include: there are more costs for establishing such entities, there are formalities and there is unemployment insurance. In general, the costs for establishing a corporation can range from a few hundred dollars to thousands of dollars in legal fees. As there will be time spent filing all of the appropriate paperwork with the courts and the state. This is significant because some business owners may not have the time or money to establish such an entity. ("Definition of a Corporation")
A second drawback of corporations is there are no formalities. This is important because once a corporation has been established, you must ensure that a number of different activities are undertaken to include: filing corporate minutes, having the board of directors / shareholders meetings and ensuring that the company is in compliance with all laws. These are important because without anyone of the above mentioned activities not covered, means that the business could lose its recognition as a separate legal entity. Where, the shareholders would be responsible for all liabilities that the company has. ("Definition of a Corporation")
A third drawback of corporation is that unemployment taxes must be paid on any salaries that are received. In many cases, the shareholder of a corporation will be a manager or work at the company. The reason why this is important is because on any kind of salary that is received, means that unemployment taxes must be paid. This can cause the overall amounts of profits to decline, by having to pay taxes that would not apply to the other types of business...
court, it will be a state court. Each state has different laws with respect to how they treat LLCs in such situations. Without knowing the state, it is impossible to know which statute a state might apply. There can be significant differences between state law on this matter (Garon, 2008). In most states, it will be difficult to adjudicate such disputes, insomuch as there is likely to be limited precedence
Business Construction Scenario Business entities vary from countries to countries since the formation of a business is controlled by the various legal systems instituted in those countries. There are many types of business entities, and this is where we find the likes of sole-proprietorship, partnership, cooperatives, corporations and limited liability Company among others (Waddell, 2008). A business may be categorized in any of these entities just by the composition of its
Partnership is not an option since there is only one principle. A corporation is too complicated a structure, since it necessitates directors, agents and shareholders. The company is essentially just one person. Sole proprietorship has some advantages. It is the cheapest and easiest type of company to set up. There are many disadvantages, however. These include the fact that the owner's personal assets are on the table if the business
Business Limited Liability Corporation and Partnership Paper A limited liability company, normally called an LLC, is a business arrangement that merge the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation (Limited Liability Company (LLC) FAQ, 2012). The federal government does not distinguish an LLC as a classification for federal tax purposes. LLC's are well-liked because, comparable to a corporation, owners have limited personal liability for
Businesses are the cornerstone of a capitalistic society. Businesses often drive economic growth and overall societal prosperity. In many instances, business can enhance the overall quality of life of those living in civilization. Looking back briefly at history, provides a unique perspective of business as it relates to societal development. Currently, looking at a minimum wage individual living in America today, they are able to perform tasks and activities that
Business Structures Overview -- There are a number of different business structures that are available to the new business owner, or someone purchasing a business. Each different structure has its own set of rules, with each having different tax and legal implications. The choice of which to use is thus based on the type of business, its overall legal liability (e.g. A rafting company vs. A resume service), the number
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