The Advantages And Disadvantages Of A Corporation

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A Corporation is referred to as a separate independent legal entity owned by shareholders. This means that the shareholders that own it are not legally liable for the actions or debts of the corporation, rather the corporation itself is held liable. Corporations are generally suggested for established larger companies with several employees due to their business structure. Corporations tend to have expensive operating procedures, administration fees, and complex tax and legal requirements. Investment capital and good quality employees are often attracted by corporations offering the ability to sell ownership shares through stock offering. This is also known as “going public” through an initial public offering. To form a corporation, a business…show more content…
As long as all the paperwork is in place and filed correctly, a corporation should not be difficult to form. The advantages of a corporation is as follows: limited liability (business debts and responsibilities or actions do not affect the personal assets of a shareholder), ability to generate capital (capital can be generated through the sale of stock), corporate tax treatment (taxes are filed separately from its owners, owners only pay taxes on profits paid to them in forms of a salary, bonus or dividends, while any additional profits are awarded a corporate tax rate, typically lower than individual tax rate), and attractive to potential employees (corporations generally can afford to offer premium benefit packages, and potential ownership through stock share purchases to attract higher educated and motivated employees. Disadvantages of a corporation in the United States include: time and money (corporations are costly to keep in operation and are time consuming to set up and start), double taxing (the process described above where corporations can be taxed twice), and additional paperwork (federal, state and local laws require increased paperwork and meticulous record keeping to keep the corporation without scrutiny). Economy can flourish in this country with the process in place. Corporations provide great job opportunities and pay quite a bit to the government in…show more content…
Basic Requirements of starting a corporation in China Forming a corporation in China starts with picking a location and detailing out a five year business plan. When the business is submitted to the government in China, the corporation can only operate within that five year plan so it is crucial that it is extremely detailed. The business plan should be as broad as possible to allow the company to operate as freely as possible. Location, projected revenues, product or service description, expected number of employees and budget requirements are main targets to include in this business plan to submit. Finding a qualified liaison is very important when going to register a corporation in China. There are many reputable firms that aid in the paperwork to make sure everything is done properly so the forming of the corporation goes smoothly. This firm would be able to help you fill out a WOFE which is a necessary piece needed to start the business. WOFE depends on details around revenue and employees. Trademarking your intellectual property is the next extremely important step. Penalties and fees will really add up if a corporation does not establish a trademark of their
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