Differences Between Individuals and Businesses Under the Law

The Differences Between Individuals and Businesses Under the Law

Businesses and individuals seem like very different entities. As it turns out, businesses and individuals aren't treated very differently under the law. This is due to the fact that corporations are treated as an individual with rights under the law, and other forms of business have limited unlimited liability, meaning the owners are responsible for the business, and the business's assets are one and the same as the owner's assets. However there are still some differences, such as the motives that legally drive parties, taxation, the rights that both entities have.

The profit motive of businesses set them apart from individuals under the law. A corporation is required to make choices that benefit the shareholders. This means that they cannot make decisions based on the will to help their fellow man or other businesses. Their one and only goal can be to bring in a profit to benefit the shareholder's position. An individual had family and friends, who in some respects are like shareholders, because they have a vested interest. However as an individual, choices can be made not just based on profit, but possibly on morality or the desire to help others.

Corporations are their own legal entity, meaning it is separate from it's members. Therefore, being it's own "person" in the eyes of the law it has its own rights, the defining ones being; the ability to sue and be sued, the ability to hold assets, the ability to hire agents, the ability to sign contracts, and the ability to create by-laws to govern it's own affairs. Individual people have many more rights than this, but this is due to an individual being able to make its own decisions where a corporation's decisions are based of its stockholders.

Taxation is a huge difference between businesses and individuals. There are differences such as tax rates and reductions or exemptions that apply. Both businesses and individuals are taxed on their income. For most individuals, it is based on how much they get paid to do their job. In contrast, a businesses income is based upon their profit not on their revenue (how much they get paid to do the job before expenses). For both businesses and individuals you are taxed a small amount for the first portion of your income, and then taxed slightly more for the next portion of your income, and so on and so forth. These portions are different sizes for individuals, and even for different types of businesses. A good example of a reduction is marriage. If you are married your taxes are slightly reduced, however a business cannot be married, so obviously this reduction would not apply to a business. On the other hand businesses can take a research and development tax credit. No matter how much an individual would like to play mad scientist, this tax credit is unavailable.

While there are differences between businesses and individuals,