Discuss the benefits and drawbacks of establishing a corporation.
Benefits of establishing a corporation:-
1. The liability of shareholders is limited to the amount they have invested. There is no personal liability.
2. It has an unforeseeable future. It means it can go on forever.
3. Corporation has the benefit of not paying shareholders when they have less profits.
Drawbacks of establishing a corporation:-
1. It is liable for so many government rules and regulations that running a corporation become costly affair.
2. Tax is charged twice on corporations. First, corporations pay taxes and then shareholders also pay the tax on the dividend they have received.
3. Shareholders cannot be part of management and sometimes they feel bad about their limited rights.
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