Corporations

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Question


After I researched the differences between an S and a C corporation, and after reading more of Kiyosaki’s book, I found myself wondering what it would take to form a corporation, and what the advantages would really be. My question therefore became, “What does forming a corporation entail, and is it really beneficial?”


Research


While searching on-line, I came across a website called MyCorporation.com. This is an internet site that provides services to those that want to form a corporation. It asks many helpful questions, and covers many of the advantages and disadvantages of corporations. However, the most helpful part of the site is that it explains many different business forms.


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First and foremost, I decided to look at the advantages and disadvantages of a corporation because I thought I might already know how to form a corporation. The advantages that I found were as follows A corporation is a separate legal entity that exists under authority granted by state law. As a separate legal entity, a corporation is responsible for its own debts. Normally, shareholders, directors, and officers are not responsible for corporate liabilities. If the corporation suffers losses, the corporation itself must bear those losses to the extent of its own resources, and not the personal assets of the individual shareholders. A corporation is capable of continuing indefinitely (mycorporation.com). The disadvantages that are listed relate to the formalities that are involved in operating a corporation and are too numerous to list here.


When I began to look at how a corporation is formed I found that the process is quite simple…as long as you hire someone to help you. The order of events is quite long, and they must be followed. Also, the process is usually not a short one. Suffice it to say that it is not something that an individual would want to do alone.


Reflection


After researching corporations for the past couple of weeks, I have found that it not something in which I am extremely interested. The only reason I would use to validate the formation of a corporation is the tax benefits they provide. However, as an independent business owner or sole proprietor, I would probably be able to have many of the same benefits. The only left to give support to the formation of a corporation is the possibility of limited liability. While limited liability is nice, unless I have a large business with assets that I do not value as personal assets, I would probably not care about limited liability. I will keep looking, but it will take a lot for me to move towards a belief in the formation of a corporation.





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