There are many ways a corporation can be classified; however the best way to classify a corporation is by knowing the characteristics that makes a corporation. The unique characteristics of corporations are consist of limited liability of stockholders, free transferability of shares, perpetual existence, and centralized management. In relation to John Marshall who is the chief justice in 1819 defined corporation as an artificial being, invisible, intangible, and existing only in contemplation of law in which the entity separate and distinct from its owners. (Weygandt, 2005, p. 527) Since, a corporation is a legal entity; it can sell shares of ownership which is referred to as stock without affecting its operations. (Warren, 2002, p. 476) Also a corporations are liable for their own contracts and debts in which share holders have limited liability. (Cheeseman, 2004, p. 675) According to Henry Cheeseman because corporation cannot be put in prison, the normal criminal penalty is the assessment of a fine, loss of a license, or other sanction. (Cheeseman, 2004, p. 675)
In the second characteristics free transferability of shares are freely transferable by the shareholders by sale, assignment, pledge, or gift in which the shareholders agree among themselves on restrictions on the transfer of shares. (Cheeseman, 2004, p. 675) The third characteristics is refer to as perpetual existence in which corporations exist in perpetuity unless a specific duration is stated in the corporations articles of incorporation, or the corporations may be involuntarily terminated by the corporations creditors if an bankruptcy against the corporation is granted. (Cheeseman, 2004, p. 675) The last characteristics of a corporation are centralized management in which the board of directors makes a policy decisions concerning the operation of the corporation. (Chesseman, 2004, p. 675)
The Essay on Hamlet And Laertes Share Common Characteristics
Hamlet by William Shakespeare is about a Danish Prince's quest for revenge for the murder of his father. Hamlet, the Prince, is told by his father's ghost that he was killed by Claudius, the current King and the dead King's brother. This infuriates Hamlet and there begins his quest for justice. Hamlet masks his knowledge of the murder under a cloud of lunacy. In this fit of supposed madness Hamlet ...
In accordance of Carl Warren, James Reeve, and Philip Fess the organizational structure of a corporation are consist of top down style in which stockholders are first then board of directors, officers and lastly employees. (Warren, 2002, p. 477)Advantages to Forming CorporationWhen a business forms, owners make a decision as to the type of entity the business is to become. The owners need to decide which form of business will best suit their needs. However, when forming a corporation certain advantages exist that sole proprietors and partnerships do not have. Some of these advantages include being a separate separate legal entity">legal entity with limited liability, ease of generating capital and transferring ownership, lack of mutual agency and continuous existence to name a few.
By having a business with a separate legal entity, the business is treated similar to how a person is treated. The business can enter into contracts, own property, sue and be sued in addition to hiring and firing employees. Since the corporation is a separate legal entity, any creditors that take action against the corporation can only satisfy claims against the personal property that the corporation holds, not the personal property of the owners. Furthermore, because the corporation is a legal entity, the company is not affected by the death, incapacity, or withdrawal of an owner (Needles, Powers and Crosson, 2005).
Generating capital and transferring ownership is also easier for a corporation. A lending agency looks at the credit history and rating of the corporation, not the owners, when making lending decisions. The corporation can issue stocks to generate capital resulting in many various owners in the company. Stockholders can buy and sell shares easily without affecting the operations of the corporation. Additionally, because the corporation has a lack of mutual agency, none of the stockholders can act as an owner by entering the corporation into a contract.
The Essay on Owning Your Own Business
There are many advantages and disadvantages when owning your own business. When you own you own business, it’s known as a sole proprietorship. But with any type of business, there will always be advantages and disadvantages. Five advantages for owning your own business are: 1) The owner receives all profits, meaning that all earnings go to the sole proprietor, or the owner, and isn’t ...
Disadvantages of forming a CorporationA corporation offers unique advantages and disadvantages. Just as there are advantages in forming a corporation there are also disadvantages. These characteristics must be considered very carefully before launching any new business. Some disadvantages of forming a corporation are:1.Corporation management—separation of ownership and management; the separation of ownership and management prevents owners from having an active role in managing the company, in which some owners like to have (Weygandt, Kieso, Kimmel, 2005).
2.Government regulations; these regulations are put into place for the intended protection of the owners of the corporation. The government regulations protection is required since most stockholders do not involve themselves in the daily management of the company. There are numerous regulations and requirements that must be upheld in a corporation. Regulations such as: State laws that generally set the requirements for issuing stock, the distribution of earnings permitted to stockholders, and the effects of retiring stock, and the Federal securities laws that are govern for the sale of capital stock to the general public (Weygandt, Kieso, Kimmel, 2005).
3.Additional Taxes; also one of the many disadvantages for a corporation due to the potential of double taxation of corporate earnings. After a corporation pays federal, state, and local income taxes on its profits, its owners (stockholders) also pay personal taxes on any distributions of those profits they receive from the corporation in the form of stock dividends. Unlike many others, a corporation must pay federal and state income taxes as a separate legal entity, these taxes are substantial: They can amount to more than 40 percent of taxable income (Weygandt, Kieso, Kimmel, 2005).
The Essay on The Advantages And Disadvantages Of Global Management
Today, after decades of expanding opportunity to all citizens, institutions are applying the lessons learned, to the task of meeting the new and growing needs of business, as well as of the larger society. The term diversity is embracing an international as well as multicultural perspective. The positive benefits that can be recognized from this diversity are significant to todays executives, ...
References
Cheeseman, H. (2004).
Business Law (5th ed.).
New Jersey: Pearson Education Inc.
Needles, Jr., B., Powers, M., & Crosson, S. (2005).
Principles of accounting. Contributed capital, p. 596. Boston: Houghton Mifflin Company.
Warren, C., Reeve, J., & Fess, P. (2002).
Accounting (20th ed.).
Cincinnati: South-Western.
Weygandt, J., Kieso, D., & Kimmel, P. (2005).
Financial Accounting (5th ed.).
New Jersey:John Wiley & Sons Inc.
