Subchapter S Corporation Advantages And Disadvantages

Corporations have their pros and cons. The pros of a corporation include the liability of the corporation instead of individuals, corporate taxes rather than personal taxes, the everlasting nature of a corporation, and the capital corporations make on the stock market. The cons of a corporation include the costs of incorporating, dealing with shareholders, and double taxation.

Advantages- Less liability for stakeholders. Ability to raise funds/capital in the form of stocks as needed.

An advantage of being a public limited company is having limited liability because of only being responsible to amount invested into Tesco PLC. Another advantage of a public limited company is being able to liquidate. This is when shares are bought or sold to shareholders if on the stock exchange it’s quoted. An additional advantage of a public limited company is the share value as Tesco PLC’s value will be shown by the market capitalisation from being the share price being what it’s based on. An extra advantage of a public limited company is having better access to capital because of the existing and new investor are raising share capital.

A public limited company can cause many advantages and disadvantages for a business. An advantage of being a PLC is that it will give the company more of a prestigious profile. This could be easier to gain access to better suppliers or opportunities for the business. Another advantage of being a public limited company is Liquidity this means shareholders can buy and sell their shares.

C corporations are able to have unlimited shareholders, which is probably an important characteristic to large companies. (S corporations, for example, may not have more than 100 shareholders.) C corporations can also be owned by non-citizens or other business entities, where S corporations can only be owned by individuals who are US citizens.

• Income Taxes: S- Corporations are tax paying entity, the business files tax returns but not taxed on earnings. The stockholders claim losses or profits on their personal tax returns.

LIABILITY- The same as a C-corporation, shareholders of S-corporation have limited liability. In the case of bankruptcy they only lose their shares of the corporation.

disagreements will happen (is not when it happens). Everyone that runs a business always has his or

Coastal Surgical Specialist Incorporated operates as an S corporation and does business as Coastal Surgical Institute (CSI). In business there are different types of corporations and an S corporation, which is often referred to as an S Corp, is a unique type of corporation created through an IRS tax election (S Corporation | The U.S. Small Business). This means that the owners (shareholders) of the corporation are protected from liability. Essentially, an S corporation 's shareholder 's personal assets cannot be seized to satisfy business liabilities, and an S corporation can avoid being taxed twice (taxing both the corporation and the shareholders). In addition, S corporation shareholders can be employees of the business and draw salaries as employees. These advantages to shareholders have helped to create a vested interest in CSI, which seems to be one of the structural keys to the organization 's overall success - there are multiple parties involved who want CSI to do well.

As a derivative of the C-corporation an S-corporation is subject to all of the same corporate formalities as the C-corporation and actually is not differentiated from the C-corporation under Texas law. This means that in Texas a corporation is founded without the designation of C or S because they are treated exactly the same inside the state. However, the difference between an S-corporation and a C-corporation under federal tax law is significant. The S-corporation is formed by making an election on IRS Form 2553 preventing taxation of profits at the corporate level (IRS, 2012b). The election to not be taxed at the corporate level by a corporation does not in any way effect the limited liability protections that the corporation has under Texas law. This exemption from corporate taxation does not mean that income is not taxed but rather that profits, credits, and deductions are automatically passed to stockholders of the corporation in the current year thereby eliminating any benefit accumulation of profits in the corporation. These pass through items are distributed to the shareholders based on the percent stock ownership of the business (Nitti, 2011).

4) A testamentary trust can be an S shareholder for two years, beginning on the date the stock transfers to the trust.

Proprietorships have three advantages: they are easy and inexpensive to form, subject to few regulations, and no corporate income taxes. The disadvantages are difficult to raise capital, unlimited liability and limited life. Partnership are similar to proprietorships in that they can be stablished relatively easily and inexpensively. The partners are generally subject to unlimited personal liability, this makes it difficult for partnerships to raise large amount of capital. Corporation also have unlimited lives, and easy transfer of ownership, limited liability and ease of raising capital to operate larger businesses. The disadvantages are double taxation, the corporation’s earnings are taxed; and then when its after-tax earnings are paid out as dividends, those earnings are taxed again as personal income to the stockholders. Limited liability reduces the risks endure by investors; and other things held constant, the lower the firm’s risk, the higher its

In order for an informed decision to be made in regards to appropriate business structure for any business it is necessary to understand each business structure separately and any attempt to understand business structure must consider the C-corporation as a baseline against which to compare subsequent business structures. A C-corporation is a business organized as a separate entity from the owner or owners of the business that requires the observation of certain formalities. In Texas these formalities include adopting bylaws, maintaining a record of accounts, issuance of stock, recording the issuance and transference of stock, recording minutes of board of director and shareholder meetings, as well as maintaining a record of current and past shareholders (Tex. BOC § 21). It is important to remember that corporate formalities will require time and expense to maintain and every attempt should be made to comply with these requirements to protect the liability limitation of the corporation’s shareholders, officers, and owners.

Subcontracting is the process of a contractual agreement with an outside person or firm to perform a certain type of work. The outer person or company in this arrangement is known as a subcontractor, but may also be called a free-lancer of the company or independent contractor, or vendor.

In this task, I will be evaluating the advantages and disadvantages of s partnership and private limited company. How majority shareholders protect their interests on the board of directors. Clarifying the rights and duties of a company director and how one is appointed to being a manager director. In addition the rights and duties of company auditor as well as their liabilities as an auditor.