ACC 281 Week 4 DQ 6 - 7424

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Why would a company choose to form as a corporation? What are the steps that are required to become a corporation? What are the advantages and disadvantages of the corporate form of doing business?

 

 

A corporation is a separate legal entity that can shield the owners from personal liability and company debt. As a separate entity, it can buy real estate, enter into contracts, sue and be sued completely separately from its owners. Also, money can be raised easier via the sale of stock

 

Steps

 

Have a Unique Corporate Name. Have your corporation’s headquarters in your home state. Choose a type of corporation..
Name your corporate directors.
Choose your kind of share. Corporations usually sell either common or preferred stock. Select the best and most suitable for your situation.
Have a Certificate of Corporation. This will prove that your incorporation is legal. You can obtain it from the local state office.
Process your Incorporation. This is usually the longer and more difficult part. But your lawyer can do this work for you. Incorporation is usually filed to a registered agent

 

PROS: The oldest, most successful and most prestigious type of business entity; provides personal liability protection; conveys permanence, can reduce taxes. Lower tax rate on retained profits, items like healthcare, travel and entertainment are deductible.

CONS: More expensive to set up than a DBA; more paperwork and formality required than an LLC. Holding Shareholder/Board meetings, keeping minutes and resolutions.

 

Solution Description

 


 

 

Why would a company choose to form as a corporation? What are the steps that are required to become a corporation? What are the advantages and disadvantages of the corporate form of doing business?