My past blogs have been discussing the processes of incorporation. Now, I am going to discuss in detail the advantages of a corporation business in the hope that it would guide you in your personal decision to form one. You want your company to grow, and this has to be sustained over a long period of time. Since corporation is one of the most common business structures, it is important that you know the benefits that you will get out of it.
The Benefits of a Corporation as a Business Form
- Raising capital is easier. Shareholders are more willing to invest in your company when you are forming a corporation. This is because their money is safer because they have this notion that corporations have larger business operations and those they have better resources to manage a business. The fact that you can have multiple shareholders who may not invest a lot of money proves that there are more sources of capital when you run a corporation.
- You rely on several people to run the company. This makes running the business easier because there are more people who will contribute to its growth. Compared to a sole proprietorship, the roles and responsibilities are distributed to its incorporators or officers in such a way that you can concentrate on one particular task only. This makes for a productive company. You also allow for more credibility in the eyes of shareholders, consumers, and attention from your community.
- The issue of ownership. The problem of sole proprietorship is when the owner dies, there will be issues about the business. One of the advantages of a corporation business is that ownership is easily facilitated by mere transfer of shares. Change of ownership is not as difficult as it is easy to process transfer of shares as this is simply recorded. All representations are merely recorded in the corporations by laws and articles of incorporation.
- Never ending existence. The perpetual existence of the corporation is not hinged on the incorporators because it is a separate legal entity. It continues to operate as a corporation even when the ownership is challenged or changes in due time. This would provide the right continuity for the business to operate.
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- Advantages in terms of taxation. There is a reduced rate of taxation and you can save a lot of taxes when you form a corporation. This is because the corporation absorbs the taxes. Make sure to qualify if your corporation falls under the C or S Corporation for that matter.
The Advantages of a Business Corporation in Terms of Liability
This is one of features of a corporation that proves to be attractive to business owners. There is a limited liability in term of obligations, debts, and other financial concerns. The shareholders of the corporation are not liable for its creditors because the corporation works as a separate entity legally. You are also protected from lawsuits since this would not be directed to the owners or shareholders. This is the very reason why business economies thrive because protection from liabilities for corporations is high.