The Benefits and Costliness of Corporations For better or for worse, we cannot hide the fact that America runs on corporations. Whether it be the designer snake skin jacket you put on to wear for the day or the succulent Starbucks™ coffee you stopped to buy on your way to work, everyday living in society is highly influenced by corporations. The growth of these corporations around the world has struck both superior and appalling rating in the opinions of the people. Some think that corporations are concentrating all the economic power, maintaining wealthy countries and their corporate interests, and at the same time they still manage to neglect the majority of the world which still lives in poverty (Share the World’s Resources). Others see corporations as advancements in society and as something that we should all just live with since they control a large amount of the wealth and political influence in our world. Despite the opinions, there are numerous benefits to owning a corporation but yet there is still always the downside of the costs and expenses. Some of these benefits include limited liability, tax advantages, the ease of raising capital, status and authority, anonymity, and the everlasting existence (Corporate Benefits). With limited liability, a corporation is a business unit separate from its owner. Therefore, if your business is incorporated, all of your personal possessions are protected from any business debts or other arguments against your business. You do not expose any of your personal property and, in most cases, incorporation will allow only your capital savings in the business to be held in the occasion of a decision against your business. Corporations often gain tax advantages, such as the deductibility of health insurance payment paid on behalf of an owner-employee, savings on self-employment taxes, and the deductibility of other expenses such as life insurance. Also, corporate tax rates are usually lower than individual rates. In addition, retirement plans, profit sharing and stock-option plans can be established in corporations in order to lower taxable income. (Benefits of Forming a Corporation) Corporations can raise capital more easily through the sale of stock. Additionally, many banks, when giving out a small business loan, want the company who is borrowing the loan to be an incorporated business. Your status and authority is very important when owning a corporation and also a great advantage. When you incorporate, you send a signal to everyone that you are serious about your business and its success. Corporations look professional and appear bigger, whether there is one shareholder or 1,000. Investors will be more attracted, customers will be more at ease and more likely to spend their hard earned dollars towards your corporation and competitors will be more nervous. The right to be completely anonymous is also in your advantage. In corporations, it is possible to have a business, yet maintain your personal privacy. Lastly, when you own a corporation you will inevitably gain perpetual existence in society. A corporation’s life does not rely on its owners. It has the feature of unlimited life, meaning if an owner dies or wishes to sell his or her interest, the corporation will continue to exist and do business. (Benefits of Forming a Corporation) Even though owning a major corporation has its rewards, there is always the fact of money, costs, and the expenses it takes to run one. Since they are legal individuals, corporations must pay taxes. The payments they make to their shareholders are not tax-deductible business expenses. When a corporation puts out these payments, the stockholders are taxed on those payments, costing a few dollars out of their pockets. Shareholders of a corporation pay income tax only when profits are actually given to them as payments. In addition, paying reasonable salaries to shareholders who take part in the operation of the business can improve the heavy burden of income tax at the individual level. There may also be situations where you as an individual pay income tax at a rate that is higher than the corporate tax rate. Along with the initial cost of these taxes, corporations’ profits go through the process of double taxation. In double taxation, “the profits of corporations are taxed twice -- once at the entity level (at the applicable state and federal corporate income tax rate), and again at the individual level when profits are distributed to individual owners as dividends (at the applicable individual income tax rate)” (Citizen Media Law Project). Even though there are disadvantages to owning corporations regarding expenses, the advantages outweigh the cost, and in return corporations continue to globalize economy and the way people live their lives. In the end, corporations are making substantial amounts of wealth through self-interest, competition and consumerism. They are progressively commercializing society and forcing the little guys out of business. Corporations will continue to take over the economy despite their financial costs because, in the end, we are the ones who keep putting money in their pockets with every latte, double cheeseburger and prescription drug we buy.

Works Cited
Benefits of Forming a Corporation. <http://www.bizfilings.com/products/articles/Benefits%20of%20Forming%20a%20Corp oration.asp> (May 1996).
Corporate Benefits: The Independent Authority on Remote Deposit Capture. <http://www.remotedepositcapture.com/Overview/CorpRDCBenefits1.htm> (March 14, 2006).
Share the World’s Resources. <http://www.stwr.net/content/view/1164/> (October 24, 2004).