The Advantages and Disadvantages of Incorporating a Business
In order to mention all the advantages and disadvantages of
incorporating a business, first I should try to explain what a corporation is.
In 1819, Chief Justice Marshall of the United States Supreme court said: " A
corporation is an artificial being, invisible, intangible, and existing only in
contemplation of the law." In the Webster's College Dictionary corporation is
defined as "an association of individuals, created by law and having an
existence apart from that of its members as well as distinct and inherent powers
and liabilities." A corporation is divided into many units called shares of
stock. The owners of the stock are called stockholders or shareholders. One of
the advantages of incorporating a business is that because a corporation has a
legal existence, shares can be sold at any time without affecting the operations
of the corporation. Also, shares can be bought at any time. Another big
advantage of incorporating a business is that corporation have limited
liabilities. This means that the corporation is responsible for its own acts and
obligations under the law. This characteristic protects the stockholders of the
corporation because the only financial loss that they may suffer is limited to
the amount invested. Also, the creditors of the corporation can not go beyond
the assets of the corporation to satisfy their claims.
The stockholders or the shareholders are the ones who have control over
the management of a corporation's operation and activities. They are the ones
who elect the board of directors, and the board of directors are responsible to
the stock ...