Question

What are the benefits of the corporation in comparison with the partnership and proprietorship structures? How is equity treated and reported differently in this structure?

Answer 1

Shareholders or owners of the corporations hold a limited liability, they contain a protection of liability which means they are not liable for the debt of the organization and their personal property is not used for the payment of the debt of the organization while owners of partnership and sole proprietorship contain a unlimited liabilities i.e. for the payment of debt can be used their personal property .

A corporation has the unique advantage of true separation of the owner with the business. This means that the corporation files a separate tax return from its shareholders. In contrast, there is less separation of the business from its owner in a sole proprietorship or partnership structure.

Corporations have continuous life

Unlike a sole proprietorship or partnership, a corporation does not expire upon the death of its shareholders, directors or officers.

Corporations make raising money easier

A corporation has many avenues to raise capital. It can sell shares of stock and create new types of stock, such as preferred stock, with different voting or profit characteristics. Plus, investors can rest assured knowing they are not personally liable for corporate debts.

Transferring the ownership interests of a corporation is easier

Ownership interests in a corporation may be sold to third parties without disturbing the continued operation of the business. A sole proprietorship or partnership, on the other hand, cannot be sold whole. Instead, each of its assets, licenses and permits must be individually transferred. Plus, new bank accounts and tax identification numbers are required.

The equity section, since it's equal to assets minus liabilities, reveals what the owners of the company actually "own." There's no real difference between the way a partnership presents assets and liabilities and the way a corporation does.

But in corporation the equity may be raise from public but In the partnership the equity is of only the partners