As a corporation represents a legal entity, it does not suffer from frailties of human beings - for example, it cannot die by itself, but only because somebody has made efforts to put an end to its existence. A partnership can be terminated if a partner dies, but, in contrast, the death of a shareholder, even the shareholder who possesses and controls a considerable percentage of the shares, will not effect either the very existence or the normal operation of a corporation. For example, if two people were carrying on a partnership business and both were killed in a traffic accident or a plane crash - the partnership would automatically be dissolved. In contrast, if two people formed a corporation together with each possessing 50% of the ...
There are a number of advantages associated with incorporation, most of which are based on the fact that the corporation is a separate legal personality. Today, let us have a look at the topic of limited liability - one of the most prominent pros of incorporation, at least at the first look.
As the corporation represents a separate legal entity, its shareholders are not liable for corporate debts and obligations - in other words, the corporation is fully responsible for its own wrong conduct. The shareholders’ liability is limited only to the amount they have paid for their shares. If the corporate assets are not sufficient to satisfy the obligations, the debt cannot be derived from the shareholders.
In view of the above, there is no doubt that limited ...
“An ounce of prevention is worth a pound of cure”
When you enter in a business with another person, you do not expect that your business will break down because of a dispute. However, in a corporate environment which involves shareholders and more than one partner, just like in a marriage, everything is possible - your partner(s) might get injured, divorced, or may die. This is why, in order to reduce the negative outcome of a possible business break-up in a future, it is crucially important to be legally prepared for any stressful situation that can arise between you and your business partner(s).
First of all, surround yourself with a team of professionals, such as accountants, financial advisors, marketing experts, and, of course, good lawyers. Before starting incorporating ...
