Page 166 - Business Principles and Management

Chapter 6 • Corporate Forms of Business Ownership

Limited liability corporations provide ideal
solutions—lower taxes and limited liability. In
addition, the profits from the corporation go
directly to the stockholders, who then include
the earnings on their individual income tax
returns. Double taxation is avoided. York, Virtual corporation outsourcing has become a
Burton, and Chan, Inc., would qualify for this significant ethical issue for firms. For example,
special tax advantage. An LLC also may be the companies like Nike have been accused of using
solution to the dilemma that Thanh Vu and foreign companies that employ child labor. Point
his two acquaintances faced at the start of this your browser to www.thomsonedu.com/school/
chapter. bpmxtra. Use a search engine to look up “Nike
outsourcing.” Evaluate some of these sites, then
visit the site of the Nike Foundation. Explain how
NONPROFIT CORPORATIONS Nike is responding to international criticism.
Close and open corporations, as discussed earlier,
are businesses that operate mainly to make a profit www.thomsonedu.com/school/bpmxtra
for their owners. A nonprofit corporation, on the
other hand, is an organization that does not pay
taxes and does not exist to make a profit. Organizations that manage cities or
operate schools are examples of nonprofit corporations. Because a nonprofit
corporation is not established as a profit-making enterprise, it does not pay
dividends to shareholders. Otherwise, it operates much like a close or open
corporation. The Rotary Club, private schools and universities, United Way,
and most local hospitals are other examples of nonprofit organizations. Even
Educational Testing Service, the company that develops the Scholastic Assess-
ment Test (SAT), is a nonprofit organization.
In this country, nonprofit corporations provide nearly one third of the
GDP. However, in most other countries, nonprofit corporations contribute
much more to the GDP. The principles of business and management provided

PHOTO: © DIGITAL VISION. Nonprofit organizations do
not make a profit for distri-
bution to stockholders. Can
you name some examples
of nonprofit organizations
in your community?

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