(1) Endless 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) Strong mobility of ownership.
(4) the superior position of the capital market
2, the shortcomings of corporate enterprises
(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.
(2) The cost of establishing a company is 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.