A company is a form of business organisation, which is an association of persons set up with an aim of undertaking the businesses. It possesses a legal status which is distinct from its members and governed by the companies act, 2013. Company is an artificial person having perpetual succession and a common seal. Generally there is confusion between the company and corporation.
Corporation is used to mean big business houses, whose presence is all over the world. In the other side, the company has a limited scope as it indicates the business entity which is present in the country where it has been registered.
Basic difference between the company and the corporation:
|Definition||A company is the one which is created and registered under the Indian Companies Act, 1956.||A company which can be registered and formed in or outside India is known as Corporation.|
|Incorporation||India||In and outside India.|
|Section||Section 2(2) of Indian companies act, 2013.||Section 2(11) of Indian Companies Act, 2013.|
|Management||A company has managers or the managing members for their management.||A corporate has a board of directors, officers and executives.|
|Legal Requirements||Less legal requirements to be fulfilled, paper works is also less in case of a company.||Corporate has to fulfil a lot of legal requirements along with a heavy paper work.|
|Accounts and records||Accounts and records which are maintained along with the less stringent submission requirements.
|It has a very comprehensive accounts and records that needs to be maintained with timely submission to the regulators, the government and the stock exchanges on which a corporate is listed.|
|Public trust||A company doesn’t enjoy the high level of public trust.||Corporate enjoys high level of public trust|
|Transparency||It has less transparency due to the flexible and easy regulatory requirements which are imposed on it||Corporate has high level of transparency due to the stringent regulatory requirements imposed on it.|
There are a few take away between a corporation and a company. For instance, the companies are typically smaller than corporations. There is some difference in the capital requirements to form a company and the corporation.
- While both the companies and corporations pay taxes but corporation are taxed twice on their profits whereas many companies can pass through their earnings or losses into individual tax return.
- Further, corporations are generally owned by multiple people and very easy to exchange the ownership. But, companies can be owned by specific individuals and transfer of ownership purely depends on the business structure.
What is a company?
To simply put, a company is any business entity which conducts a value exchange of goods or services with customers. The ultimate goal of a company is to earn a profit.
- Interestingly, there is one thing that all the corporations can be considered as companies, but not every company is considered as corporation.
- There are some different ways to structure a company and each has its own advantages and disadvantages regards with business operations and tax purposes.
While deciding on a business structure, it is very important to take your time and find the option which best suits for your business needs.
Company registration in Salem offers beneficial and reliable business services at a reasonable cost.
It’s very crucial to select a certain kind of business structure; you can even do the additional research and can consult a legal business service provider for better assistance.
- There are different kinds of companies to start with the business journey. The most common structure is sole proprietorship. This one has no legal separation from the owner but it allows recognizing the business expenses on their tax return.
- A general partnership is also very similar to a sole proprietorship since the owners can recognize business expenses and profits on their personal taxes. But the main difference is it can consist of two or more people who can do business together. All the companies must have a registered office under its name and the business entity can face the legal action.
What is a corporation?
It is a separate legal entity from its owners. One common action of a corporation is the selling of ownership in the form of stocks. To raise a capital, selling a stock is one of the great ways.
Individuals who own a shares or stocks are considered to be the owners. The number of stocks an individual owns in a company actually determines their percentage of ownership.
For instance, if a corporation has 1000 shares and the particular person owned 500, then he/she would own 50% of that company.
- Ownership do not dictate management, most corporations usually elect a board of directors to act behalf of the shareholders. The board of directors selects managers to run the day to day operations and conduct meetings to take critical business decisions.
Tax returns must be filed separately by the owners. Because corporations are an independent legal entity, owners are not liable for debts and the liabilities which have been incurred by the corporation.
Thus, the legal documentations and the applications for incorporating your company are little bit a tedious one other than the business structures.
Internal Revenue Service (IRS) gives corporation their own tax number and requires the corporation to pay taxes on their revenue. Generally taxes are generally paid on the money which is earned by the corporation and the earning paid to the owners in the form of salary and dividends.
Double taxation means, taxed twice on their earnings once at the individual level and once at the corporate level.
What is S-Corporation and C-corporation?
- S-corporation is a distinctive type of corporate entity which provides special tax advantages to the owners of the business.
- It must file its paperwork with the Internal Revenue Service. The ownership is limited to individuals in S-corporation.
- It is well suited for the small-sized businesses since it shouldn’t be more than 100 shareholders participating as the owners of the company
- Shareholders who are employed by an S-corporation own more than 2 percent of the company cannot deduct fringe benefits. S-corporation cannot issue more than one class of stock.
- C- Corporation refers to the regular corporation and it is automatically formed when a business decides to incorporate.
- There is no requirement for C-corporations. It can have limited liability companies, partnerships, foreign businesses and other corporations participating as owners of the company.
- C-corporation can have many shareholders as they want.
- It can deduct the cost of fringe benefits which are provided to employees like health insurance and disability.
- Shareholders in a C-Corporation do not pay taxes on fringe benefits which they receive from the company.
- It can issue multiple classes of stock and it can carry various voting and the profit privileges for the shareholders of the company since it issues various stock classes.
- These stocks may be owned by a foreign person or business and it can operate the company in a global capacity.
“Solubilis Corporate Services”, the finest business service providers who can do your company registration process within the shortest period of time. Company registration in Salem offers you so many benefits, the highly skilled professional are there to guide you and provides a best customer support throughout the process.
For more details -> click here.