Formation of Corporations and Stocks Essay Example for Free

Formation of Corporations and Stocks raise* Why does a company choose to form as a corporation? What are the step required to become a corporation? What are the advantages and disadvantages of the corporate form of doing business? Corporations are created in order to separate the businesses finances from the persons individual finances so that they can treasure themselves financially. The advantages of forming a corporation are that the business can obtain the credibility so that consumers are more than comfortable. Since consumers normally culls to do business with a corporation. Also by forming a corporation the person protects their assets and pass water by forming a corporation. The disadvantages are that the process is lengthy and pricey. Also corporations often end up pay more in taxes. Corporations are also monitored very closely and must be in form with several entities.* Why is preferred deport referred to as preferred? What are some of the features added to pr eferred product line that make it more attractive to investors? Would you assign preferred stock or common stock as an investment? Why? Preferred stock is considered preferred because it has dividend preference over common stock. Preferred stockholders gull the right to receive dividends before common stockholders. The per share dividend amount is stated as a constituent of the preferred stocks per value or as a specified amount. Preferred stockholders must ne compensable their annual dividend plus any dividends in arrears before common stockholders receive any dividends. I would select referred stock over common stock because I call for to get paid as pronto as possible.* What are the different types of dividends corporations may issue? When should a corporation pay dividends? Do you prefer a stock dividend or a bullion dividend? Why There are four types of dividends 1. cash dividends, 2. property dividends, 3. scrip (note), and 4. stock dividends. A corporation should pay dividends when it has retained earning, adequate cash, and a declaration of dividends. I would prefer a cash dividend. If the corporation issues stock, they are not having to spend actual cash. I want to be reassured that the business actually has my money. I have seen it too many times where extensive corporations lie and cheat on paper. I also do not really like the stock market and never have been good at buying, selling, or owning stock.