The Benefits And Costliness Of Corporations

961 words, 4 pages

Intro Sample...


(Benefits of Forming a Corporation)
Corporations can raise capital more easily through the sale of stock. Additionally, many banks, when giving out a small business loan, want the company who is borrowing the loan to be an incorporated business. Your status and authority is very important when owning a corporation and also a great advantage. When you incorporate, you send a signal to everyone that you are serious about your business and its success. Corporations look professional and appear bigger, whether there is one shareholder or 1,000. Investors will be more attracted, customers will be more at ease and more likely to spend their hard earned dollars towards your corporation and competitors will be more nervous. The right to be completely anonymous is also in your advantage. In corporations, it is possible to have a business, yet maintain your personal privacy. Lastly, when you own a corporation you will inevitably gain perpetual existence in society. A corporation’s life does not rely on its owners. It has the feature of unlimited life, meaning if an owner dies or wishes to sell his or her interest, the corporation will continue to exist and do business. (Benefits of Forming a Corporation)
Even though owning a major corporation has its rewards, there is always the fact of money, costs, and the expenses it takes to run one. Since they are legal individuals, corporations must pay taxes. The payments they make to their shareholders are not tax-deductible business expenses. When a corporation puts out these payments, the stockholders are taxed on those payments, costing a few dollars out of their pockets. Shareholders of a corporation pay income tax only when profits are actually given to them as payments. In addition, paying reasonable salaries to shareholders who take part in the operation of the business can improve the heavy burde View More »

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