Business Ethics And Corporate Responsibility Marketing Essay

Business Ethics And Corporate Responsibility Marketing Essay Describe the basic features that distinguish the three traditional forms of business ownership: sole proprietorships, general partnerships and C corporations. ~Sole proprietorship is a business that is owned and managed by one individual. Earnings of the company are treated as income and debts that arise are personal debts. It is the most common type of business organization in United States. ~General partnership: In this type of business all partners have right to participate in management of the firm and share any profits or losses. There is no limit on number of partners but usually it’s two. ~C corporation is a legal entity, separate and distinct from its owners. It’s owned by stockholders. Its mission and objective are established by board of directors and board of directors is selected by stockholders to protect their interests. Compare and contrast the advantages and disadvantages of sole proprietorships and general partnerships. ~Both are easy to form, have tax advantages, and unlimited liability. ~General partnership has a stronger financial base than sole proprietorship. ~On the other hand, general partnership can be destroyed much easier than sole ~proprietorship because of disagreements between partners. ~ Another disadvantage in sole proprietorship is that workload and responsibilities are on one person while in partnership it’s shared. What advantages help explain why virtually all large companies are organized as C corporations? ~Corporations can raise huge amount of financial capital ~It’s easy for stockholders to withdraw from ownership or sell shares of stock ~Stockholders have limited liability. They are not personally liable for the debts of the company. What steps are involved in starting a general corporation? ~Requires filing form called the articles of incorporation, with a specific state agency. ~Pay filling fees and establish corporate bylaws-basic the basic rules governing how a corporation is organized an d how it manages its business. ~Companies also choose corporation friendly states, because not all states are friendly and charge a lot of money. How is a corporation’s board of directors chosen? Explain the role the board plays in a corporation’s management. ~ According to corporate bylaws stockholders elect board of directors that they rely on to manage company and protect their interests. ~Board of directors establishes the corporation’s mission and sets its broad objectives. ~Board of directors then assigns the chief of executive officer and other corporate officers to manage company. Explain how S corporations, statutory closed corporations, and nonprofit corporations differ from C corporations. ~S corporation: IRS does not tax earning separately, can have no more than 100 stockholders, each stockholder have to be U.S. citizen or permanent resident. ~Statutory close corporation: Doesn’t have to elect a board of directors or hold annual stockholders m eetings, number of stockholders are limited to 50, stockholders can’t sell their shares to public without first offering to existing owners, not all states allow this type of corporation. ~Nonprofit corporation: Has members but not stockholders, cannot contribute funds to a political campaign, must keep accurate records, earnings are exempt from federal and state income, make tax deduction for individuals who contribute money or property.