Understanding Corporations: Types, Advantages, Disadvantages, and Registration, Schemes and Mind Maps of Finance

Download Understanding Corporations: Types, Advantages, Disadvantages, and Registration and more Schemes and Mind Maps Finance in PDF only on Docsity! CORPORATION What is corporation  It is own by more than one individual.  A corporation is created by operation of law rather than a contract.  A corporation is artificial being or juridical person, meaning in the eyes the law, a corporation is like a person, separates from its owners. Non profit Corporation  One of the four major of corporation is the non profit corporation (also called not-for-profit corporation).  it is define in the american bar association model non profit corporation act as’’a corporation no part of the income of the income of which is distributable to each members,directors or officers.’’ Public Corporation  The true public corporation is a governmental entity.  it is often called a municipal corporation, to distinguish it from the publicly held corporation, which is sometimes also referred to as a’’Public’’ corporation, althought it is in fact private (i.e. it is not governmental). Professional Corporations  A professional corporation is a variation of the corporate form available to entrepreneurs who provide professional services—such as doctors, lawyers, accountants, consultants, and architects. "Professionals," Frederick W. Dailey explained in his book Tax Savvy for Small Business, "are treated as small businesses under the tax code. Most of them operate as sole proprietorships or partnerships, and are subject to the same tax rules as other similar businesses. However, certain professionals who offer services may form and operate a special type of entity, called a professional corporation. ADVANTAGE DISADVANTAGE  A stockholder who is not a member of the corporation’s board of directors is relieved from managerial responsibilities. Only the stock holders that are elected as members of the board of directors and those they hire or appoint are task with managerial responsibilities.  Your say on corporate affairs depends on the number of shares you own. Those who own more shares are the bosses and enjoy a larger share of the corporations profits. ADVANTAGE DISADVANTAGE  Limited liability of the owners because stock holders are liable for corporate debts only up to the amount they have invested.  Greater capital and ease in raising additional funds because a corporation can issue shares to a wider extend of investors .  A corporation is more difficult and more costly to form because there are more formal business requirements.  Greater extent of government regulation and higher taxes Ability to form access to capital  What is Access to Capital. Access to capital is how hard or easy it is for someone to get money or resources for their business. Most people need to access capital when starting or growing a business.  Since most corporations sell ownership through publicly traded stock, they can easily raise funds by selling stock. This access to funding is a luxury that other entity types don’t have. It is great not only for growing a business, but also for saving a corporation from going bankrupt in times of need.  Here are the basic steps and requirements:  • Go to the municipal office where your business is located to secure and fill-up application form  • Submit your completed application form together with the following:  o Certificate of Business Registration from SEC  o Barangay Clearance Certificate  o Two (2) valid IDs  o Proof of Address such as Contract of Lease (if rented) or Certificate of Land Title (if owned)  Processing Time: At least one week upon submission of complete documents. But It can take longer depending on the permit requirements based on the industry.  4. Register with the Bureau of Internal Revenue (BIR)  Once you have the Mayor’s Business Permit, you can now register with the BIR.  Here are the basic steps and requirements:  • Go to the Regional District Office (RDO) where your business is located  • Fill-up registration form as follows:  o BIR Form 1903 – Application for Registration (For Partnership/Corporation)  • Submit completed registration form together with the following:  o Certificate of Registration form SEC  o Barangay Clearance  o Business Permit From the Mayor’s Office  o Proof of Address such as Contract of Lease (if rented) or Certificate of Land Title (if owned)  o Valid IDs, if applicable.  • Pay the Registration Form (BIR Form 0605) and Documentary Stamp Tax (BIR Form 2000), if applicable.  • Register your book of accounts and receipts/invoices.  • Claim your Certificate of Registration (BIR Form 2303) QUIZ A corporation is created by (1)______ rather than a (2)____. 4 Classification of Corporation. (3-6) (7) Is a variation of corporate form available to entrepreneurs who provide professional services- such as doctors, lawyers, accountants, consultants and architects. (8) They own the corporation and are primarily responsible for electing directors. (9) It is often called “municipal corporation”, to distinguish it from the publicly held corporation. (10) They are in charge of the day to day task of the business. They are held to their duties by the board directors.