S-Corporations
An S-Corporation or S Corp is formed by an IRS tax election.(IRS Code sections 1361 through 1379). When a S Corp is formed it must first have a charter in the state where the headquarters of the S Corp is located. The approach that an S Corp is taxed is different from other business organizations that have been examined previously, because profits and losses can carry over to your personal tax return.is happens because the S Corp itself is not taxed, however the investors are taxed.
Liability: Investors have limited liability. This protects investors from having litigation brought against them. If the investor is a managing partner, however they then could have their personal assets and property employed to satisfy any debt the S Corp has accrued.
Income is paid to shareholders as wages then that is also taxed on the shareholder 's personal income tax return.
Longevity or Continuity: A C - Corp has unlimited life. Unlike sole proprietor or S Corps, an investor can transfer or give their shares in the company to whom ever they choose.
Control: C - Corp is controlled by its shareholders, Board of Directors and corporate officers.
Profit Retention: shareholders share the profits of the company by way of dividends. Location: A C - Corp has annual state filings that must be maintained and each state requirements C-corporations must adhere to federal and state guidelines and expansion into other states requires legal filings in that state to operate and maintain a business presence. (Beatty & Samuelson, 2007, pp. 762-764)
Continuity:A C- Corp has an indefinite life span. As long as corporation can stay relevant and offer products that are useful to the world a business can have a long life.
Murray, Jean. "PLLC--Professional Limited Liability Company". About.com. Retrieved 22 April
A shareholder is anyone who owns shares in an organisation’s company. Shareholders profit if the organisation performs well while if the organisation performs poorly a shareholder stands to lose (Investopia). The impact of BHP Billiton on shareholders with the expansion of the Olympic Dam Mine is that the expansion is going to cost over 200 million US dollars with a majority of this coming from shareholder contributions. If the expansion does not generate a high enough revenue the shareholders are at risk of not being repaid in the form of
A corporation was originally designed to allow for the forming of a group to get a single project done, after which it would be disbanded. At the end of the Civil War, the 14th amendment was passed in order to protect the rights of former slaves. At this point, corporate lawyers worked to define a corporation as a “person,” granting them the right to life, liberty and property. Ever since this distinction was made, corporations have become bigger and bigger, controlling many aspects of the economy and the lives of Americans. Corporations are not good for America because they outsource jobs, they lie and deceive, and they knowingly make and sell products that can harm people and animals, all in order to raise profits.
Corporation – “A business organization that exists as a legal entity and provides limited liability to its owners.” (Longenecker, Petty, Palich, Hoy, Pg. 205) The main advantage of a corporation is that the business liability falls onto this entity instead of the individuals that own it. The disadvantages of this organization are found mostly in its formation. A corporation is expensive to create and requires compliance with state
The Economic Dimension: Do corporations benefit from shareholders limited liability if so how? For example, the company should obtain insurance, and if the company is sued the defendant is not held liable. If someone sues the insurance company is held liable. The law firm argued that court should pierce the business veil, because did not observe corporate formality, and because Brennan brothers did not honor their promises to pay their legal bills. Generally, shareholders are not personally liable for corporate acts.
According to Mallor, Barnes, Bowers, & Langvardt (2010) “modern corporation law emerged only in the last 200 years, ancestors of the modern corporation existed in the times of Hammurabi, ancient Greece, and the Roman Empire. As early as 1248 in France, privileges of incorporation were given to mercantile ventures to encourage investment for the benefit of society. In England, the corporate form was used extensively before the 16th century. In the late 18th century, general incorporation statutes emerged in the United States” (p. 1009).
A nice advantage to owning a S corporation is that it is limited liability which means that the owner/owners of the company
Corporations create two kinds of securities: bonds, representing debt, and stocks, representing ownership or equity interest in their operations. (In Great Britain, the term stock ordinarily refers to a loan, whereas the equity segment is called
Bialkower, Richard J. Morgan, 1984, pp. 15-18) mentioned in their book the advantages and disadvantages of Company’s business structure the Advantages Continuity of existence means the company has long life as it stop to exist when it is deregistered. This permit the directors and shareholders continue changes as time passes by. A broad source of fund as the company is generally vast in capital, therefore it is much easier to get funding. The limited liability concept means that the shareholders are constrained to just unpaid (if any) shares of the company and the lenders can 't go to the shareholders or directors personal assets to fulfil the obligation if there has the company went insolvency . From the levy perspective, the company is taxed at a flat rate and the organization is the person who pays the tax. On the other hand, Companies could be extravagant and complicated to framed as tit should be registered with ASIC and send a financial report to it and that is time consuming and costly. By the by, if the business is doing incredible and has development potential, the expenses and disadvantages of the company will be surpassed by the
A corporation is a separate legal entity which is incorporated through the legislative process of going through a registration process. A corporation either operates as a non-profit or profit organization. The corporation has to follow the lawful rights and obligations that are different from the employees and shareholders. Corporations have some good and bad with its formation. The creation of a shield that will protect individuals from legal responsibility and personal liabil...
Limited liability- as the ownership is scattered all over, it is difficult to acquire resources compare to
This particular statute allows for corporations and such to obtain several, but not all, constitutional rights as any person or persons. In particularly own property, sue and be sued under criminal and civil law, enter contests. Moreover, because corporations and such are considerate as “person”, business has the legal rights for its debts and damages. On the contrary, persons who are employed by a particular association are liable for their own misconduct and law-breaking while acting on behalf of a corporation. In addition, corporation has rights for its own actions, has rights such as: limited free speech and to advertise their product ("The Rights of Corporations," 2009). Likewise, businesses have the responsibility to elect a CEO, provide continuity; increase profits, social responsibilities, and manages recourses effectively (“Functions & Responsibilities of a Corporation").
It has been said that the most popular reason why a company is formed is to take advantages of the limited liability principle. However, we must also consider that although a company is a separate legal personality, it can have unlimited liability, that is, the shareholders may still be liable for the company’s debts.
It is known that corporations play a large part in making the world go around. Many times we read, hear or see stories on companies and why something was done a certain way. The film “The Corporation” has given a whole new insight to not only how businesses operate but what motivates them and their decisions that they make to keep their businesses thriving.
First and foremost, since the company is treated as its own legal entity from the date of incorporation the ownership of all the property, contracts, debts belong to it, and therefore in normal circumstances in case of problems it would get sued, not the members of the company, thus letting them only have a limited liability over it (limited by their investment in the company), which allows to separate people who own the company from those who control it, since their interest might not be aligned in all times. It is particularly true in cases of large conglomerates, such as Barclays bank
For a company to register as an incorporated company, there is a rulebook and guide available as per the government.1 (ASIC, no date)