Question

What are the main advantages and disadvantages of organizing a firm as a corporation there is no limit on the number of owners?

Answer 1

A corporation is a form of ownership where a company sells its shares as stocks to anyone willing to buy it.

The main advantage of a shareholder of a corporation is that, you are only entitled to your own liabilities and not the whole corporation. If you have 30 shares of that corporation, then that is your only responsibility. Second, it is everlasting as long as the company does not go bankrupt.

The disadvantage is the double taxation. Aside from paying taxes on your income, you will also pay taxes for the dividends received. A corporation is also heavily monitored by the government. So, you would expect excessive filings of legal documents before you can put up this type of ownership.

Answer 2

The main advantages of organizing a firm as a corporation are there is no limit on the number of owners, it means business will continue after the death of any of the owner. The liability of the owner is according to the amount they invested in the firm.

The main disadvantages of organizing a firm as a corporation are firstly corporation is very complicated and its setup is very expensive as compared to other business entities. And secondly there is double tax to pay.