Corporations have unlimited life as it is owned by stockholders and managed by employees, the death of a shareholder or an inefficient employee does not harm the continuous life of a corporation.
Each and every shareholder has limited liability to the amount each has invested in the corporation.
It is considered as a separate legal entity, conducting business in its own name.
A corporation can easily raise its capital by selling stock or bonds.
Advantages of corporations are:
Unlimited Life: The life of a corporation is endless as it is not affected by the death of a shareholder or an inefficient employee.
Easy to raise capital: A corporation can easily raise capital by selling bonds and shares.
Transfer of ownership: As the ownership is represented by number of shareholders, the transfer of ownership becomes very easy.
Disadvantages of corporations are:
Difficult to form: A corporation is difficult to form as the cost for setting up a corporation is high and also it needs registration with the central regulatory authority.
Double Taxation: In case of corporations there is double taxation. First of all the corporate income is taxed at a flat rate and then the dividends paid to the shareholders is taxed.
Conflict: There may be a possibility of conflict between the shareholders and the directors.
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