One advantage of a corporate form of business is it avoids double taxation by using receipts instead of wages. Forming as a corporation also makes it much easier for the company to raise funds. One advantage of a corporate form of business is that most corporations are less highly taxed than private individuals. This lowers their rate of corporate tax.
There are some disadvantages to this advantage of a corporate form of business
The disadvantage of one advantage of the corporate form of organization is when a corporation is incorporated in a state, federal, or city and becomes a huge corporation with many employees, it will have to pay taxes on its income just like everyone else does. Another disadvantage of one advantage of the corporate form of organization is when it loses that status and goes bankrupt, it can be difficult to liquidate assets and liquidate personal assets unless it is through public auction. Also, some states have rules and regulations to protect against unfair trade practices and these laws may prevent corporations from having their assets sold for little or no value. These laws usually have an exception for well-established large corporations and those in the service industry such as hospitals and restaurants.
The advantage of a corporate form of business is its ability to avoid double taxation
This is because the corporation deducts its income taxes from its earnings before it passes them to the government. It then pays the government directly and leaves its shareholders with a tax refund. Because there are no double taxation, this makes a corporation very attractive to investors and entrepreneurs. There are no double taxation for this advantage of the corporation.
One disadvantage of a corporation is when one shareholder embezzles money or invests fraudulently in the company, then all of the investors in the corporation will be liable for this crime. They will also need to pay the penalties and damages that are caused by this crime. This can be detrimental to the overall good reputation of the company.
In the United States, a corporation has to register its corporation with the secretary of state
Every one in every state requires corporations to have their Articles of Organization. They must provide information on how they were formed, who created them, how the stock is held, and what their officers are. In order to qualify for a vote of confidence, shareholders must hold a majority of the Board of Directors.
On a yearly basis, corporations must give a public notice of their annual meetings
This allows shareholders to go about organizing and submitting articles of corporate resolutions. This also lets other shareholders know what moves the company will make in a year. There are many different types of dividends, a shareholder may choose from, such as common stocks, preferred stocks, dividend reinvestment programs, and dividend recapitalization programs.
It is important to note that a corporation is not run by its shareholders alone
The corporation must have a Board of Directors, which consists of a president, a vice president, a board of directors, and two or more general managers. The corporation must have a manager who is able to make the decisions as needed. There are advantages to having a president, such as having a person who can make critical and strategic decisions regarding the company. However, it may cause problems if the president and general managers do not get along or trust each other, and a perpetual existence for a corporation is not allowed.
The only real disadvantage of this structure is when the sole power of running the company is handed over to one individual. This can be a very dangerous thing, especially if that person is the CEO. This can lead the company into a perpetual existence that could become dangerous in a few years. A great disadvantage of a limited liability corporation is the fact that most people do not want to risk their money in it. If a person owns shares in a corporation, it is much more difficult to get those shares out without going through a long and drawn out process.