Company are probably the dominant form of business organization in the India. Although fewer in number, Company account for the lion’s share of aggregate business receipts in the Indian economy. A corporation is a legal entity doing business, and is distinct from the individuals within the entity. Public Company are owned by shareholders who elect a board of directors to oversee primary responsibilities. Along with standard, for-profit Company, there are charitable, not-for-profit Company.
- Unlimited commercial life. The corporation is an entity of its own and does not dissolve when ownership changes.
- Greater flexibility in raising capital through the sale of stock.
- Ease of transferring ownership by selling stock.
- Limited liability. This limited liability is probably the biggest advantage to organizing as a corporation. Individual owners in Company have limits on their personal liability. Even if a corporation is sued for billions of dollars, individual shareholder’s liability is generally limited to the value of their own stock in the corporation.
- Regulatory restrictions. Company are typically more closely monitored by governmental agencies, including federal, state, and local. Complying with regulations can be costly.
- Higher organizational and operational costs. Company have to file articles of incorporation with the appropriate state authorities. These legal and clerical expenses, along with other recurring operational expenses, can contribute to budgetary challenges.
- Double taxation. The possibility of double taxation arises when companies declare and pay taxes on the net income of the corporation, which they pay through their corporate income tax returns. If the corporation also pays out dividends to individual shareholders, those shareholders must declare that dividend income as personal income and pay taxes at the individual income tax rates. Thus, the possibility of double taxation.