Cc Corporation Case Study
A C corporation is the standard corporation, while S corporation, its counterpart, has a special tax status with the IRS. If a new corporation is formed, it is by default a C corporation. “A corporation or C corporation is an independent legal entity that is owned by the shareholders (reference180.com).” The independent legal entity means that a corporation is given many of the same legal rights as a person. This means that a corporation can sue or be sued and is liable for the actions that it did not the shareholders.
A corporation is more complex compared to the other organizational structure such as sole proprietorship, partnership, and limited liability company (LLC).
It is …show more content…
Corporation: The first advantage of a corporation is its limited liability. It means that shareholders are only liable to the creditors by the amount of money they have invested in the company. Shareholder’s personal assets are not at stake. Another advantage is that a corporation is a legal entity, which means it has the same legal rights as a person and the shareholders are not liable for the actions that the company made. The corporation may also be able to raise additional capital by selling the shares of the corporation. It is also easy to transfer ownership because it is represented by shares.
The disadvantage of a corporation is that it is more complex than the other organizational structures. It is a lot harder to form and heavily regulated that requires a lot of compliance to the government and a lot of administrative paper work to fill. Another disadvantage is that it 's hard to control or predict its governance. The shareholders elect the Board of Directors and the Board of Directors elect the CEO. The CEO will be the one in charge of the day to day operation of the company. There is a possibility that the CEO will act on their interests instead of the shareholders. Another advantage is that corporation are taxed double; the income of the business is taxed and the dividend of the shareholders is also …show more content…
Another advantage is that 's it has pass-through taxation like a sole proprietorship or a partnership and with this there’s no double taxation. Another advantage is that there is a flexibility in the management and the distribution of profit and loss like in a partnership. LLC is also easy to form and has a lot lesser paper works compared to a corporation. LLC also signifies permanence and credibility. I also mean that the company is now registered at the state level.
One of the disadvantages of an LLC is its limited life. When a member dies, then the LLC will cease to exist. It is also hard to transfer ownership. It depends on what is the buy-sell agreement in the operating agreement. Even though LLC is not double taxed, it is subjected into self-employment tax. Also, the IRS does not treat an LLC as a partnership if there is only one member.
d) What is “corporate social responsibility (CSR)”? How will you apply CSR in your management