Identify the primary advantages of the corporate form of business compared to a sole proprietorship or partnership.Check All That ApplyLimited liabilityLimited liabilityAbility to raise capitalAbility to raise capitalLower taxesLower taxesLess paperworkLess paperworkEase of incorporationEase of incorporation
Question
Identify the primary advantages of the corporate form of business compared to a sole proprietorship or partnership.Check All That ApplyLimited liabilityLimited liabilityAbility to raise capitalAbility to raise capitalLower taxesLower taxesLess paperworkLess paperworkEase of incorporationEase of incorporation
Solution
The primary advantages of the corporate form of business compared to a sole proprietorship or partnership are:
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Limited Liability: In a corporation, the owners' personal assets are protected from business debts and liabilities. This is not the case in a sole proprietorship or partnership where the owners are personally liable for business debts.
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Ability to Raise Capital: Corporations have an easier time raising capital as they can issue shares of stock, which can be attractive to investors. This is a significant advantage over sole proprietorships and partnerships.
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Ease of Incorporation: While the process of incorporation involves more paperwork and expense than a sole proprietorship or a partnership, once the corporation has been established, it becomes easier to operate because it is a separate legal entity.
However, corporations do not necessarily have lower taxes or less paperwork. In fact, corporations often face higher taxes and more regulatory paperwork than sole proprietorships or partnerships.
Similar Questions
Identify the primary disadvantages of the corporate form of business compared to a sole proprietorship or partnership.Check All That ApplyOwnership limitationsOwnership limitationsDouble taxationDouble taxationPersonal liabilityPersonal liabilityMore paperwork
The advantages of a corporation compared to a sole proprietorship or partnership include:Multiple ChoiceThe ability of stockholders to make operating decisions for their company.Less paper work.Limited liability.Lower total taxes.
Which of the following is a disadvantage of operating a business as a sole proprietorship?Multiple choice question.Single taxationPersonal liability for business debtsManagerial control of business and profitsFewer legal formalities required for business start-up compared to a corporation
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