Thursday, October 17, 2019

Business Structures Coursework Example | Topics and Well Written Essays - 500 words

Business Structures - Coursework Example General corporations exhibit unlimited life. They continue to exist upon the death of the shareholders. It is easier to transfer the ownership of a general corporation. Such transfer take place through sale of stock and does not affect the management of the business. As a business structure, general corporations have limitations. Relative to sole proprietorship, general corporations are expensive to start due to the large capital base required. The formation of general corporations entails more legal formality. They are also subject to many federal and state rules and regulations during their operations. Formation of S Corporation businesses depend on the decision of the owners to avoid income tax while at the same time keep enjoying the advantages associated with limited liability of corporations. In terms of advantages, the S corporations exhibit the same benefits as the general corporations. Distinction between the advantages of the two businesses structures sets in when it comes to tax issue (Jamison, 2009). S corporations enjoy exemption from double taxation that is mandatory for the general corporations. S Corporations escape from double taxation because reporting of incomes occurs once during the filing of personal tax returns of the shareholders. The liability of shareholders in S Corporation is limited. The major disadvantage of this type of business structure is the dominance in decision-making by the majority shareholder. At times, .the decision made may not be to the best interest of other shareholders. The shareholders in the S corporation must come from the United Stat es. Aliens do not have the right to run the business type. During formation of this business structure, certificate of incorporation is a requirement. A limited liability company combines limited liability features of corporations and limited taxation of sole proprietorship.

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