4. What are the benefits of the corporate form? Could an alternative model offer these as well?
The corporate forma can have many benefits but can also have some disadvantages. Some of the benefits are:
1. Limited Liability, that says that the owners, or shareholders, of a corporation are not liable for the debts and obligations of a corporation. This means that, as normal rule, creditors of a corporation can not hold the shareholders responsible for the debts of the corporation. If the corporation can not pay its creditors, then the creditors have no right to claim payment from the shareholders.
2. Ownership Easily Transferable, this means that qwnership of a corporation is transferred easily by transferring the shares. It can be as simple as endorsing the back of the share certificate in favour of the new owner of the shares.
3. A corporation also has Perpetual Existence, since a corporation is a separate legal entity from the shareholders, the corporation can have perpetual existence. It continues as a corporation in law even if the ownership of the corporation itself changes.
3. Also has tax advantages, in some cases not all, there can be a tax advantage to operating a business through a corporation as opposed to a sole proprietorship, a partnership or some other form. If a corporation qualifies as a small business and has active income, then it can take advantage of the small business deduction and pay income taxes at a substantially reduced rate.
4. It can also be able to raise capital faster than some other forms, this happens for a number of reasons. It is easier than a partnership or sole proprietor because lenders are more willing to lend capital to a corporation.
There are generally three common business structures that are used, which are:
1. sole proprietorship
2. a partnership
3. a corporation
We can see that all of them have some points in common but not all of them have as many benefits as those of the corporation. But even though it has more benefits it also has some disadvantages, like it is greater regulations by authority, it could cost more, it also has to keep records that authority asks for in order for everything to be checked.
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On the one hand i agree with you that a corporate form have advantages like reduced tax rates, easy access to capital investment, perpetual existance if the corporations is succesful, limited liability, and easy transfeable ownership; all these advantages can be helpful if what i want is to create a corparation.
ResponderEliminarBut on the other hand, the benefits of a corporate form are not the only factors that play an important role when creating a company; objectives, interests, money, time, and so on; are also important to have in mind in order to take an accurate decision.
I agree with Sebastian´s comment, the objectives, money, interests, time and more are also factors that play an important role when creating a company. But I also think that this questios was well answered and I really liked it.
ResponderEliminarI agree with Sebastian and Melissa because this advantages are on behalf, mostly, of the shareholders which are the ones directly benefied by this monetary advantages and are only material and economical concerns.
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