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Benefits and disadvantages to the corporate form

In relation to a corporation, why is it organized this way? What are the benefits and drawbacks to owners? Employees?

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One of the main reasons corporations are organized as they are is to allow the entity to take in shareholders who invest cash in exchange for stock. Other types of entities do not have the legal separation afforded to a corporation.

Remember that a corporation is an 'artificial person' under the law meaning that it is formed with perpetuity in mind. It will not disappear when the owners die as in a sole proprietorship; it will not be dissolved as a partnership will in the event one of the partners vacates his/her partnership interest (whether through death or by preference).

A corporation also affords ...

Solution Summary

The solution discusses the unique characteristics of corporations and explains the benefits of the legal form. Corporations are compared to partnerships to demonstrate the differences. In summary, the solution lists 6 benefits and 4 disadvantages in using the corporate form. The solution is 350 words and is cited.

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