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4 Handout PDF
4 Handout PDF
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12/10/2017
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12/10/2017
General Features of a Partnership General Features of a Partnership Advantages and Disadvantages of a General Partnership
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12/10/2017
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12/10/2017
General Features of a Corporation General Features of a Corporation Advantages and Disadvantages of a Corporation
6. Government Regulations. Corporations are subject to stricter 8. Dividends. The corporation is not required to distribute to Advantages
government regulation than sole proprietorships and partnerships. stockholders the income it generated from operations. The Ability to acquire additional capital
Being major contributors to the income of the whole economy, the stockholders of a corporation will only be entitled to receive a share Transferable ownership rights
operations of corporations are closely monitored by the government. of the income once the board of directors approves the distribution.
Large corporations provide employment opportunities to the public The income distributed to stockholders is called dividends. Limited liability of stockholders
and stimulate the growth of the company. The bankruptcy of a large Dividends may be in the form of cash, stock, or property. Cash Virtually unlimited life
corporation can cause the whole economy to also spiral dividends are distribution of income in the form of cash. It is Large pool of human capital
downwards. Government regulations are designed not only for the normally stated as a nominal amount of per share of stock.
protection of public interest, but also for the stockholders’ as well. Even though the approval of the board of directors is necessary before Disadvantages
7. Double Taxation. The income of a corporation is taxed on the income can be distributed, dividends are given to the stockholders Heavily regulated by the government
corporate level and the individual level. The income of a sole on a regular basis to keep them happy. If stockholders do not
proprietorship or a partnership is part of the individual income of the Double taxation
regularly receive dividends, they tend to become dissatisfied and
owners. It is taxed once the owners file their respective tax returns. sell their stocks. Not easy to form
In a corporation, the income is already taxed before being More expensive to form than sole proprietorships and
distributed to the stockholders. Once a stockholder receives his or partnerships
her share of the income, it is included in his or her tax return and will
be taxed for the second time.