The Importance of a Corporation
A corporation is a company where a group of people are perceived to be part-owners. There are basically two types of corporations: one that is privately owned and another, a publicly held corporation. A privately held corporation is one where the shareholders know each other. They are usually related to each other, some corporations have the whole family as the shareholders. An example of a privately listed company is Cargill Corporation. A publicly listed corporation is one where the shareholders virtually do not know each other.
One advantage of a corporation is the limited liability exercised to its owners. When the company was engaged in a lawsuit, the corporation is liable for its settlement fees and not the owners or major stockholders. In the case of sole proprietorship, the owner of the business is considered as the company itself thus he will be held liable should he lost in the lawsuit. He will be the one answerable and might just go to jail. In a corporation, the worst thing that can happen is for the company to close down.
A corporation makes it possible for a company to gather huge amounts of initial capital. This is so because more and more people would be buying shares in the hope of gaining annual dividends from the company. That company would then have lots of capital to invest on the companys sophisticated office structure and materials and manpower.
Corporations are also deemed to exist eternally as long as there are shareholders that possess their stocks. This lies in the value that the company is strong and stable. Future shareholders would then be attracted to invest in the company since it stable, thus eliminating risks. A corporation has a good operations systems and working environment because of the huge capital invested on equipments and manpower which makes it attractive for future investors.
There are many privately-held companies nowadays who switch to making their company publicly-owned for the reasons of: expansion and improvement or sophistication of business models. - 23210
One advantage of a corporation is the limited liability exercised to its owners. When the company was engaged in a lawsuit, the corporation is liable for its settlement fees and not the owners or major stockholders. In the case of sole proprietorship, the owner of the business is considered as the company itself thus he will be held liable should he lost in the lawsuit. He will be the one answerable and might just go to jail. In a corporation, the worst thing that can happen is for the company to close down.
A corporation makes it possible for a company to gather huge amounts of initial capital. This is so because more and more people would be buying shares in the hope of gaining annual dividends from the company. That company would then have lots of capital to invest on the companys sophisticated office structure and materials and manpower.
Corporations are also deemed to exist eternally as long as there are shareholders that possess their stocks. This lies in the value that the company is strong and stable. Future shareholders would then be attracted to invest in the company since it stable, thus eliminating risks. A corporation has a good operations systems and working environment because of the huge capital invested on equipments and manpower which makes it attractive for future investors.
There are many privately-held companies nowadays who switch to making their company publicly-owned for the reasons of: expansion and improvement or sophistication of business models. - 23210
About the Author:
Mara Hernandez-Capili is a writer and a researcher on Business and Finance. Learn more on how to increase your financial intelligence by learning about emini trading today. Start earning extra income by making your money work for you through the emini trading system. "Start your journey to financial freedom not tomorrow, not next week, but today."
posted by X - Men @ 3:38 AM
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