MENDOZA, James Kert A.

SEATWORK
BUSINESS ETHICS AND SOCIAL RESPONSIBILITY 12

Post Activity
Write a short essay why most large businesses are organized as corporation and identify at
least six characteristics of a corporate form of business organization. Contrast each one with
partnership form of organization.

Most of the large businesses chose to organize as a corporation because of its benefits
and advantages. Corporations and partnerships are very different from each other in terms of
many aspects, especially in their structural form. A corporation is more complex and does
include more people which can help for the decision-making process of the company.
Second, a corporation is a separate legal body owned by shareholders, in which the
shareholders decide who will operate and how the company will manage. A partnership is a
business entity in which two or more people share ownership where all duties, expenses,
profit and liabilities are shared by two or more owners.

Below are listed some of the characteristics of a Corporation as business organization:

Corporation are more costly and difficult to form than a partnership because it
requires a lot of administrative fees, legal and tax requirements. On the other
hand, partnership business organization are less expensive and easier to form.
In terms or raising funds or capital, corporation can easily acquire additional
capital since it has the option to sell shares of the corporation and they can attract
investors and stockholders even attract venture capital for start-up and growth
opportunities. Although partnerships can raise capital by selling equity interests,
this is very difficult to do on a big scale because of possible personal liabilities
and all profits must accrue to the owner or to the partners in a partnership.
In terms of taxation, Corporation are required to pay taxes both state and national
taxes and shareholders must also pay taxes, while partnership do not have to pay
corporate taxes, but instead the gains and losses are passed on to individual
general partners based from US small business administration.
Corporations do not hold individuals liable for the debt or legal obligations of the
corporation and consider it as separate entity and thus the corporation itself is
responsible for accepting all debts and legal costs, and the shareholders are not at
risk of losing personal properties. While for partnership, partners are held
responsible for all business debts and legal obligations. The assets of the General
Partners may be taken to pay the debts of the Company.
Partnerships have more basic management frameworks than corporation. In a
partnership business organization, all partners decide how to operate the business.
Partners often have management responsibilities or participate in the decisions of
recruiting and controlling managers. For Corporation, it governed by shareholders
who hold daily meetings to establish governance and policies and they are usually
not interested in the day-to-day management of the company, but instead oversee
the management of the company as a whole.
Continuity and ease of transfer of ownership are one of the key characteristics of a
corporation which means it can outlive its owner because it is a separate person in
the eye of law because of perpetual existence. And it allows the corporation to
plan for long term than in a partnership business organization.