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Partnership vs.Corporation (Taxation) - Assignment Example
Finance & Accounting
Pages 5 (1255 words)
Partnership vs. Corporation (Taxation) Name Institution Partnership vs. Corporation (Taxation) 1. Compare and contrast the advantages and disadvantages inherent in electing to become a partnership and a corporation. Every business seeks to minimize losses and maximize profits…
Advantages and disadvantages related to becoming a corporation Incorporating a business has many merits attached to it. A corporate business has many structures that make it enjoy protection from liability. Corporation also has ease of growth. It is also easy to transfer ownership to another. It is flexible and never rigid. The major disadvantage of a corporation is the double taxation that is levied upon the firm/corporation (Piper, 2008). The taxation is levied at the corporation level and the individual earnings are taxed. There are also fee charged for maintaining the status of a corporation and that of keeping and running corporate meetings throughout the year. In spite of these demerits attached to the corporation, it is important to note that it is easy for a corporation to go public. A corporation enjoys liability protection. In a corporation, owners and stakeholders are given indemnity from the debt incurred by the corporation. In case of the default and the bankruptcy of a corporation, owners and stakeholders do not come to be part of the debt. Therefore, individuals in the corporation cannot suffer. The personal assets and corporation assets are not interfered with in case a corporation is unable to pay its debts. Thought the corporation face double taxations; there exist cases where they are given tax breaks. ...
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