Corporate entrepreneurship is crucial for the development and expansion of a nation’s economy. Corporate entrepreneurship results in the growth of already-existing companies, which opens up employment options for the workforce, lowers unemployment rates and raises general living standards. Governments may promote a vibrant business climate, stimulate economic growth, and build a more successful and resilient society by encouraging entrepreneurial projects.
Why is corporate entrepreneurship a better option?
Some business owners might favor the ease and control of a sole proprietorship, while others could choose the expansion opportunities and restricted liability provided by a corporation. Here are a few justifications for why corporate entrepreneurship is viewed as more advantageous:
- Corporations can guarantee the continuity of the business because they are recognized as legal entities; if a shareholder passed away, his or her business would continue to run.
- In corporate entrepreneurship, shareholders may benefit from the versatility of capital raising and the ability to provide new cash to expand the business, but sole proprietors may find it tricky to do so due to constrained access to targeted capital raising.
- Corporations are able to produce more wealth than single proprietorships because they can access a wider market, serve more clients, and increase sales income. Profitability may increase as a result of this.
- It is simple to buy and sell shares without interfering with corporate activities. In a sole proprietorship, the ownership change may be more difficult, and need to sell the entire company.
It should be mentioned that both business models have virtues and the choice should be based on the particulars of each situation as well as a careful assessment of the needs and goals of the company.
VAT in sole proprietorship and corporate entrepreneurship:
Value-Added Tax is referred to as VAT. 부가가치세 is a consumption tax that is tacked onto the price of products and services purchased and sold during business operations in both corporate and sole proprietorship. You must pay VAT (often referred to as “input VAT”) when you purchase products or services for your business, whether you are a sole proprietor or a corporation. The “output VAT” you charge on the selling price of goods or services you provide to clients is known as the “sales VAT.” The effect of VAT on organizational structures is influenced by a number of variables, such as the size of the company, the volume of transactions, and the applicable VAT laws in the nation of operation. As a result of their capacity to recoup back taxes paid on purchases, firms may find VAT to be more profitable. Corporations frequently engage in more extensive purchasing operations, increasing their chances of recovering a sizeable sum of VAT. This may help with cash flow and lessen overall tax liability.