Corporation

Part I.

Similarities

 Has juridical personality

 Term of existence has no limitation

Distinctions

 Partnership is created by mere agreement of parties while corporation is

created by law.

 The purpose of partnership is to divide the profits among partners while in

corporation the purpose depends on the article of incorporation.

 The number of organizers in a partnership is has no limit but should be at

least 2, while in corporation it should only consist of 2-15 organizers.

 The juridical personality of the partnership is commenced at the execution of

the contract unless otherwise stipulated, however, in corporation it is
commenced from the date of issuance of the certificate of incorporation from
SEC.

 A partner may not dispose his interest unless agreed upon by all the partners,
in corporation, a stockholder has a right to transfer his shares.

 In partnership, all partners are managers unless some are designated to

manage, in contrast, management is vested by the board of directors of the
corporation.

 Death of a partner dissolves a partnership while death of a stockholder does

not dissolve a corporation.

 In dissolution, a partnership may be dissolved at any time by the will of the

partners, but a corporation can only be dissolved with the consent of the
State.

Part II.
Advantages of Corporation

 A stockholder who’s not a member of the corporation’s board of directors is

relieved from managerial responsibilities.

 Limited liability of the owners because stockholders are liable for corporate
debts only up to the amount they have invested.

 Greater capital and ease in raising additional funds because a corporation can
issue shares to a wider extent of investors.

 If the corporation is listed, you can easily transfer your shares to other
investors by selling them in the stock market. Many investors earn profit this
way – by buying shares at a cheap price, sell them at a higher price.

 Unlimited life, the withdrawal, death or insanity of one stockholders does not
dissolve the corporation. Although it has a legal life of 50 years, this can be
renewed indefinitely.

Disadvantages of Corporation

 Double taxation. Depending on the type of corporation, it may pay taxes on

its income, after which shareholders pay taxes on any dividends received, so
income can be taxed twice.

 Greater extent of government regulation and higher taxes.

 A corporation is more difficult and more costly to form because there are
more formal business requirements.

 Unlike for a sole proprietorship or a partnership where business profits are

easily distributed to the owner, in a corporation, you have to wait fro the
board of directors to declare dividends before you can get your share in the
profits.