/kloc-a legal person enterprise with independent legal person property, independent operation and self-financing invested by more than 0% investors (natural persons or legal persons).
Second, advantages:
1, infinite existence
A company can continue to exist after the original owner and operator quit.
2. Limited debt liability
Corporate debt is the debt of the legal person, not the debt of the owner. The owner's debt liability is limited to the amount of his capital contribution.
3. Ownership is highly mobile.
4. The superior position of the capital market
Third, shortcomings
1, double taxation
As an independent legal person, the company needs to pay enterprise income tax for its profits. After the profits are distributed to shareholders, shareholders have to pay personal income tax.
The cost of setting up a company is very high.
The company law requires the establishment of a company to be higher than that of a sole proprietorship or partnership, and various reports need to be submitted.
3. There is an agency problem.
After the separation of the operator and the owner, the operator is called the agent and the owner is called the principal. An agent may harm the interests of the principal for his own benefit.
Extended data:
The difference between sole proprietorship, partnership and corporate enterprise;
Sole proprietorship enterprise:
Refers to the business entity established in China according to the Law on Wholly Owned Enterprises, which is invested by natural persons, and its property is owned by investors, who bear unlimited liability for corporate debts with their personal property.
Second, partnership:
Refers to a for-profit organization established in China in accordance with the Partnership Enterprise Law, in which all partners enter into a partnership agreement, * * * jointly contribute capital, operate in partnership, * * * enjoy benefits, * * * bear risks, and bear unlimited joint and several liabilities for the debts of the partnership enterprise.
Partnership refers to the general partnership and limited partnership established in China by natural persons, legal persons and other organizations in accordance with this Law.
A general partnership consists of general partners, who are jointly and severally liable for the debts of the partnership. Where this Law has special provisions on the liability form of general partners, such provisions shall prevail.
Limited partnership consists of general partner and limited partner. The general partner shall be jointly and severally liable for the debts of the partnership, and the limited partner shall be liable for the debts of the partnership to the extent of the capital contribution subscribed.
3. Companies and enterprises:
It refers to an organization that is generally for profit, engaged in business activities or established for a certain purpose. According to the current Company Law of China (2005), its main forms are limited liability companies and joint stock limited companies. These two types of companies are legal persons (Article 36 of the General Principles of Civil Law), and investors can be protected through limited liability.
Generally speaking, a company refers to a kind of for-profit legal entity registered in the statutory registration authority.