Question

definition for a “Corporation” and mention and explain the “Advantages” and “Disadvantages”

Answer 1

A corporation is a legal entity that is created by individuals. The purpose is diverse for earning a profit or for entering into a venture.

The moot point is the creation of a legal entity by following some procedures. The incorporation happens with the creation of the legal document. In it, the objective of the business or purpose, name or location, no of shares, etc are specified.

The entity has a different status compared to the individuals who created it.

It has several advantages as well as disadvantages.

Advantages are.....

Life is unlimited...even if some of the individuals are deceased the corporation will go on.

Separate entity....The legal entity of the corporation is different from the individuals who created it, that is why even the individual can enter into a contract with it.

Transfer of ownership---the owners can transfer their shares of stock or interest in the corporation to a different person.

Limited liability....The corporation can liability but the individual's liability are limited to the extent of percentage share in the corporation.

Disadvantages are

The cost of incorporation ----the cost of incorporation are substantial.

Double liability on revenue taxation--Corporation will pay tax on its income and the share of income included in the hand of the individual for taxation.