-Convenience or Burden: This is a very populare business form in that it has limited liability as well as not being taxed as a corporation. The downside being it can become difficult to obtain resources as with all limited liability companies, because members are not personally liable for repaying any debt accrued by the company. Members personal property are not affected by the company.
The purpose of this paper is to explain the two main theories – internalization theory and OLI eclectic paradigm theory – and to critique these in relation to some of the other conceptual models that have been advocated. One of the most well accepted models of FDI is Buckley and Casson’s (1976) internalisation theory, who developed a model of MNCs and FDIs centered around the interrelationship between market imperfections, knowledge and the internalisation of production and consumption (Buckley and Casson, 2009). Specifically, the theory recognized that multinational corporations are both horizontally and vertically organized, and that the “the vertically integrated firm internalises a market for an intermediate product, just as the horizontal MNE [multinational enterprise] internalises markets for proprietary assets” (Caves, 1996: p.13). In addition, internalisation will occur, and multinational corporations will expand only as far as the advantages, including barriers to entry, are not offset by the costs of control, communi... ... middle of paper ... ...ect investment in the United States. Journal of International Business Studies 7(2), pp.
An LLC protects the members from private liability for the business obligations and activities of the professional handling of the business. In any case, if the LLC suffers debts or is engaged in a lawsuit the associates of an LLC are not obligated to gratify the liability or for compensations from their personal finances. Another advantage of LLC is that a multimember LLC has certain tax benefits. In the USA, the LLC is treated as a passthrough entity meaning that the income of the ... ... middle of paper ... ...y decisions in the business. A partnership is a relationship of two partners or more who are in business with the aim of making a profit.
Advantages of the Corporate Structure A company is a legal entity created separately from those who own and operate it. As a separate entity, the company's debts and taxes are separate from its owners (shareholders), thereby, offering the greatest personal liability protection of all business structures. A company is an artificial "legal" person. It is owned by shareholders who have limited liability (i.e., they are not personally responsible for the company’s debts). A company is run by directors.
The Principle of Separate Corporate Personality The principle of separate corporate personality has been firmly established in the common law since the decision in the case of Salomon v Salomon & Co Ltd, whereby a corporation has a separate legal personality, rights and obligations totally distinct from those of its shareholders. Legislation and courts nevertheless sometimes "pierce the corporate veil" so as to hold the shareholders personally liable for the liabilities of the corporation. Courts may also "lift the corporate veil", in the conflict of laws in order to determine who actually controls the corporation, and thus to ascertain the corporation's true contacts, and closest and most real connection. Throughout the course of this assignment I will begin by explaining the concept of legal personality and describe the veil of incorporation. I will give examples of when the veil of incorporation can be lifted by the courts and statuary provisions such as s.24 CA 1985 and incorporate the varying views of judges as to when the veil can be lifted.
This is referred to as limited liability protection. There are some advantages to operating as an S Corporation. An S Corporation owner has the benefit of having their personal assets being protected. This is to say that if the business does not succeed, the creditors are not allowed to go after the owner’s personal property such as their house and personal bank account. S Corporations also are not required to pay federal taxes.
Sole Proprietorship Sole proprietorship is the most common form of business in the United States. It is a relatively simple way for an individual to start a business since legal costs and business requirements are minimal, and the owner has complete control over the business. Though a sole proprietor is not responsible for any corporate tax payments, the owner is responsible for taxes incurred on the income generated from the business as part of his or her personal income tax payments, and personally shoulders any other risks or obligations. A sole proprietor may also choose to file their business under a fictitious business name or a DBA (doing business as), allowing him or her to operate and market the business under a more typical business name rather than their personal name. However, the business is not considered a separate entity and the sole proprietor is still personally liable for all obligations incurred by the business.
The reason for creating the legal fiction of the separate legal personality has been said to be a matter of convenience. However, unlike a human being, a company has no natural lifespan. It can be dissolved by special procedures. The separate legal personality concept is useful in large companies where there are many shareholders and these shareholders are frequently changing (perpetual succession). But the mere fact of a change in shareholders has no effect on the company’s existence.
To this end, whilst referring to a legal subject, a private person as well as corporate body can be held to have legal rights and obligations (Caste, 1992). There are however different types of corporations, like; general corporations which are the most common. They are in most cases with an unlimited number of stockholders. The liability of the stockholder is taken to be as much as their amount of investment. Secondly there is a closed corporation which is most appropriate for a person who wishes to start a company alone or with a small number of people.
Secondly conflict also arises due to asymmetric information about participant’s action and preferences. Firm need corporate governance structure to address these issues. Jensen and Meckling (1976) conclude that this problem can be by separating corporate ownership from corporate management. This separation helps the executives to pursue their own interest rather the interest of shareholder. In countries with wea... ... middle of paper ... ...rations have been deducted from sales, and income taxes recognized.