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A company may have a single shareholder or several. In listed companies, there are often thousands of shareholders. Companies are established and regulated in accordance with company law in their jurisdiction of residence. Companies differ not only in size and industry, but also in their owners. Some belong to a single person or a small group of people, others to a large number of shareholders, others to foundations or charitable trusts, and others to the state. Different ownership structures overlap with different legal forms that a business can take. The legal and ownership structure of a business determines many of its legal responsibilities, including the formalities that owners must complete to form the business, the taxes the corporation must pay, how the company`s profits are distributed, and the personal liability of the owners if the business suffers a loss or goes bankrupt. Taxation (S-Corp): S-Corps chooses to pass on the corporation`s income, losses, deductions and credits to its shareholders for federal tax purposes. However, the Company is required to report income, losses, profits, deductions, credits, etc. on Form 1120S.

Shareholders of S Corporations report the corporation`s income and losses on their personal income tax returns and pay federal income tax at their personal income tax rates. In this way, S-Bodies avoid double taxation. Company Benefits: • The shareholders of the company have limited liability, which means that the company is responsible for all liabilities incurred by the company. • Generally favorable training for investors. Legal and ownership structures, company size and industrial sector are not completely independent of each other. For example, most sole proprietors tend to be small businesses, not least because a single person rarely has the financial capacity to finance a very large business, nor the desire to be personally responsible for everything they own if a large business were to run into financial difficulties. Some industrial sectors require large companies. For example, it does not make sense to run a small steel mill because the physical and financial investments required are so large.

In other cases, the industrial sector and the legal form are closely linked. For example, law firms and certain other professional services companies where more than one professional operates in the UK are required by law to be incorporated and no other form of ownership or legal form is permitted. Disadvantages of businesses: • The process of starting the business is stricter and more expensive. • Profits are subject to «double taxation», which means that profits are taxed at the corporate level and at the individual level when distributed to shareholders. • High level of governance and oversight by the Board of Directors. There are a few other legal ownership structures for businesses in the UK (including some different laws relating to partnerships in Scotland), but the three presented above are the most common. Similar corporate ownership structures exist in many other countries, although the exact legal implications may differ in important respects. Like sole proprietorships and partnerships, businesses have both positive and negative aspects. In sole proprietorships and partnerships, for example, the people who own and manage a business are the same. However, business leaders do not necessarily own shares and shareholders do not necessarily work for the company. This can be problematic if the goals of the two groups differ significantly.

All kinds of companies around the world use companies. Although the exact legal status varies somewhat from jurisdiction to jurisdiction, the most important aspect of a business is limited liability. This means that shareholders can share profits through dividends and stock prices, but are not personally liable for the company`s debts. Five years after launching their ice cream business, Ben Cohen and Jerry Greenfield evaluated the pros and cons of the company`s ownership form, and the «professionals» won. The main motivation was the need to raise funds for the construction of a $2 million production facility. Not only did Ben and Jerry decide to move from a partnership to a corporation, but they also decided to sell shares to the public (and thus become a public company). Their sale of shares to the public was a bit unusual: Ben and Jerry wanted the community to own the company, so instead of offering the shares to anyone interested in buying a stock, they only offered shares to Vermont residents. Ben believed that «companies have a responsibility to give back to the community they support.» 5 He wanted the company to be owned by those who lined up at the gas station to buy cones. The stock was so popular that one in a hundred families in Vermont bought shares in the company.6 Finally, as the company continued to grow, the shares were sold nationwide. Advantages of the LLC structure: • The owners have limited liability, which means that the company is responsible for all liabilities incurred by the company. • The profits and losses of the company are passed on to the member and taxed only at the individual level. • Allows an unlimited number of members The company has several advantages over the sole proprietorship.

First, it brings together a diverse group of talented people who are responsible for running the business. Secondly, it facilitates financing: the company can draw on the financial resources of a number of people. Partners not only contribute to the business, but can also use personal resources to secure bank loans. After all, continuity doesn`t have to be an issue, as partners can legally agree that the partnership can survive if one or more partners die. A partnership (or partnership) is a partnership jointly owned by two or more persons. About 10% of U.S. companies2 are partnerships2, and while the vast majority are small, some are quite large. For example, the big four accounting firms are partnerships. Starting a partnership is more complex than starting a sole proprietorship, but it`s still relatively simple and inexpensive. Costs vary depending on size and complexity. It is possible to form a simple partnership without the help of a lawyer or accountant, although it is usually a good idea to seek professional advice. A corporation (sometimes called a regular corporation or C) is different from a sole proprietorship and a partnership because it is a legal entity that is completely independent of the parties that own it.

He can enter into binding contracts, buy and sell property, sue and sue, be held responsible for his actions and be taxed. Once companies have reached a considerable size, it is advantageous to organize as a company so that its owners can limit their liability. On average, therefore, firms are generally much larger than firms that use other forms of ownership. As shown in Figure 6.2, companies make up 18% of all U.S. businesses, but generate nearly 82% of their revenue.3 Most of the well-known large companies are corporations, but also many small businesses that you`re likely to do business with. When you start a new business, you need to decide which legal form of ownership is best for you and your business. Would you like to own the business yourself and operate as a sole proprietorship? Or do you want to share ownership and operate as a partnership or corporation? Before discussing the pros and cons of these three types of property, let`s address some of the questions you would likely ask yourself when choosing the appropriate legal form for your business. A corporation is a separate legal entity from its owners. Businesses enjoy most of the rights and obligations that individuals possess: they can enter into contracts, borrow and borrow money, sue and be sued, hire employees, own assets, and pay taxes. Some call it a «legal entity.» We`ve outlined the four most common corporate legal structures with considerations for each below, including taxes, liability, and formation of each.

Ready? Liability: A corporation is an «immortal» legal entity, which means that it does not end with the death of the shareholder. The shareholders of the company have limited liability because they are not personally responsible for the debts and obligations of the company. Shareholders cannot lose more money than the amount they have invested in the business. Like the provisions of an LLC, shareholders must be careful not to «penetrate the corporate veil.» Personal checking accounts should not be used for commercial purposes and the company name should always be used when interacting with customers. Taxation: A partnership is a reporting entity and not a taxing entity. A partnership must file an annual information return (Form 1065) with the IRS to report operating income and losses, but does not pay federal income tax.