Corporation definitions

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Corporation

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is an artificial person, created by law, has most of the right of a real person.

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Limited Liability

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If a corporation fails, the creditors only claim the assets of the corporation.

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Ease of raising capital

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Easy to raise capital by selling ownership to investor in exchange of capital, or seeking for private investor to provide capital in exchange of equity stakes in the company.

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Ease of transferring ownership

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Transfer ownership by selling shares of stock, practically no restriction apply to the sale and purchase of stock issued by an open corporation

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Perpetual life

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Exist indecently by its owner surviving them

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Specialized management

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Corporation are able to recruit more skilled, knowledgable and talented manager than sole proprietorship and partnership.

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Difficulty and expense of formation

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Process are relatively complex and costly

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Conflict within the corporation

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The pressure to increase sales revenue, reduce expenses, and increase profits often leads to stress and tension for both managers and employee

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Double taxation

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Corporation must pay a tax on their profit, stockholders must pay personal income tax on profits receive as dividends.

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Lack of secrecy

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Open corporation are required to submit detailed report to government agencies and stockholders, cannot keep their operation confidential.