SHARETIPSINFO >> Articles Directory >>Corporation and partnership in relation to financial sector

 

There are several closely related terms in finance. The best example to site is a corporation and partnership. The corporation means the enterprise for business started by many individuals. The business can sell its shares to the investors in the business who has invested capital for the establishment of the business. The main difference between corporation and partnership is the liability. The narrow boundary line can never differentiate them as partnership also means a business started by many owners. Here also the profit will be shared among the investors.

Corporation can protect the liability of each owner involved in the business. Here the personal risk is limited to a maximum value by the investment in the business. That means corporation has limited liability. This means that the business will be having more than one owner. The owners who will be licensed in the business can include an accountant or a lawyer. Creation of tax reporting with corporation is a difficult task. Taxation is applicable to a corporation. The share holders own the corporation in other words. They elect the Board of Directors to govern the corporation. If the corporation falls under a C-corporation, it has to follow double taxation.

Corporation as a whole is a legal entity. The legal individuality of the corporation is different from that of the members. There are legal constraints and obligations for the corporation. They can employ the agents and has their own internal rights. The existence of a corporation demands a legal set up and framework which determines the legal personality of the corporation.

The legal entities as well as members who are individuals has the freedom as well as right to vote in the corporation and to share the profit made from the corporation. They should have a distinct name by which they are known in the world. Membership can influence the naming of the corporations.

There are different types of corporations. They include for-profit and non-profit corporations, closely held and public corporations, mutual benefit corporations etc. Along with these corporations, there are multinational corporations in different countries. Corporations have a fixed taxation that governs them. Along with this, they receive criticisms from people and government.

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