FINE 2000 Chapter Notes - Chapter 1: Capital Structure, Limited Liability Company, Sole Proprietorship

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coffeeduck671

24 May 2012

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Corporation: permanent, legal entity owned by shareholders/stockholders who are not personally liable for the business" liabilities. Confers limited liability (principle that the owners of the corporation are not personally responsible for its obligations. Prepare articles of incorporation and can incorporate under canadian business corporation act (federal) or provincial laws. Private company: corporation whose shares are privately owned (by small groups of managers and investors: not required to provide much financial information. All have board of directors, a group selected by shareholders, given responsibility of overseeing activities including appointment of top managers; in private company, shareholders are on the board. Legal separation of ownership and management, which gives the corporation permanence, is a distinctive feature ex. If manager is fired and replaced, corporation still survives. Some public companies have shareholder who owns more than 50% of shares who is most likely involved in operations.

Related Questions

An advantage of corporations over other forms of business organization is: Corporations face fewer regulations Corporations face less tax liability Corporate shareholders face unlimited liability, but get dividends Corporate investors face unlimited liability Corporations face fewer obstacles in raising large amounts of capital

bronzekangaroo836

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In deciding which entity to use for a new business, it is good to review the benefits and disadvantage of each one. A corporation According to e-text (page 1094) A corporation is liable to third person for the act of it is officers, employees, and agent to the same extent that a natural person is liable act of agents and employees. Because of the corporation is a separate legal person debt, the debts that owe are ordinarily the obligation of the corporation only. It is good to know the advantage and the person itself is not responsible of the corporation debts because nobody want debts that goes after their personal properties. I think thatâs the reason business owner choose a form of corporation however, the double taxation of appreciated assets on sale or dissolution is a bad disadvantage but it can be a right choice for certain situation because nobody wants to hold liable for their business debts, or personal income or any other personal assets. An owner always wants taxable profit and retain growth to pay down their business debts, even though the corporations taxes are extremely higher than a LLC, but I still recommended a business to choose a corporation that better benefit for them. A LLC taxes are lower but owner is personally obligator to any debts. It is good to know that corporation can also deduct disability insurance for owner-employees which is a significant advantage, reduced gain for capital gain and audit potential for tax liability A corporation enjoys limited liability, while partner is personal liable for the business. Frost, T. S. (1984). In regard to taxes, a corporation can generate tax saving if the corporate tax rate is lower than the personal one and if earning is retained in the corporation. the worse part will be the shareholder because they can be held personally liable for corporate debt and the creditor can now go after the shareholder property and their bank account and other assets that satisfy their dues. Frost, T. S. (1984). Tax aspects of the form of doing business. Dun and Bradstreet, Inc.D & B Reports, 22(1), 58. Starkman, J. (2007). Advantages of a C corporation. The Tax Adviser, 38(10), 617-618.

lavenderfrog549

Which of the following could explain why a business might choose to operate as a corporation rather than as a sole proprietorship or a partnership?
Answer

Corporations generally find it relatively difficult to raise large amounts of capital.

Less of a corporation's income is generally subjected to taxes than would be true if the firm were a partnership.

Corporate shareholders escape liability for the firm's debts, but this factor may be offset by the tax disadvantages of the corporate form of organization.

Corporate investors are exposed to unlimited liability.

Corporations generally face relatively few regulations.

FINE 2000 Chapter Notes - Chapter 1: Capital Structure, Limited Liability Company, Sole Proprietorship

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