Module 13 in Tourism Law

Ednalou S. Buraga
BSHIM III

Learning Objectives:

1. Differentiate the various kinds of partnership and corporations and the responsibilities of
partners and incorporators; and
- The main difference between a partnership and a corporation is the separation between
the owners and the business. Corporations are separate from their owners, but in
partnerships, owners share the business's risks and benefits. In a partnership, two or
more individuals who wish to do business together form a company.

2. Identify the requirements in the formation and dissolution of partnerships and corporations.

- Partnerships can dissolve for various reasons and under many circumstances. When a
partnership dissolves, the partners share equally when it comes to profits and gains.
There are generally no tax consequences from dissolving a partnership. The partners do
need to account for all properties involved in the business.

Learning Activities

Answer the following questions.

1. How does a partnership differ from a corporation?

- A partnership is formed with at least two individuals who want to do business together
and share the ownership, profits, and liabilities of the business. A corporation is owned
by shareholders and can be formed for profit or for non-profit. If the business is for
profit, the profits are reinvested in the business and then divided among shareholders
as dividends.

2. What is the concept of a corporation?

- A corporation is a legal entity that is separate and distinct from its owners. Corporations
enjoy most of the rights and responsibilities that individuals possess, they can enter
contracts, loan and borrow money, sue and be sued, hire employees, own assets, and
pay taxes.
3. What are the advantages of a corporation??
- Advantages of a corporation include personal liability protection, business security and
continuity, and easier access to capital.
4. What are the disadvantages of a corporation?
- Disadvantages of a corporation include it being time-consuming and subject to double
taxation, as well as having rigid formalities and protocols to follow.
5. What are the different kinds of corporation?
- Kinds of corporations:
S-Corps and C-Corps.
6. What are the formalities required in forming a corporation?
- Adherence to corporate formalities is often cited as a significant disadvantage for those
who consider a Corporation as a business form and this is often why many instead opt
for a Limited Liability Company (LLC). In addition to entity maintenance and formalities,
selecting the appropriate entity should also reflect tax, partnership structuring, and
decision-making considerations, which is why individuals starting a new business should
always seek qualified legal counsel and tax advice.
7. Explain the process of dissolving a corporation.
1. Call a Board Meeting
Once you have decided to close the operations of a corporation, it is recommended that you
hold a Board of Director's meeting to formally move to dissolve the corporation. A vote must be
taken and the minutes of the meeting must be recorded and retained in the records of the
corporation.
2. File a Certificate of Dissolution With the Secretary of State.
You can contact the Office of the Secretary of State in the state in which your company is
incorporated to obtain the necessary forms required to file an official Certificate of Dissolution
with the government agency or you can file the paperwork online.
3. Notify the Internal Revenue Service (IRS).
Once you sign and file the dissolution forms with the state agency, you should next notify the
Internal Revenue Service (IRS) to inform the agency your intended company dissolution.
4. Close Accounts and Credit Lines, Cancel Licenses, Etc.
Do not forget to close all bank accounts, credit lines, and service accounts held in your
corporate or business name. You will want to terminate all licenses, permits, and/or permits for
fictitious name too. Finally, be sure you notify all customers and vendors about your
corporation’s dissolution. If you undertake each step properly, you will successfully close your
corporation.