Why might a business choose to operate as a corporation rather than as a sole proprietorship or a partnership?
A)Less of a corporation's income is generally subjected to taxes than would be true if the firm were a partnership.
B)Corporate shareholders escape liability for the firm's debts, but this factor may be offset by the tax disadvantages of the corporate form of organization.
C)Corporate investors are exposed to limited growth potential.
D)Corporations generally face relatively few regulations.

Question

Quizplus · Accepted Answer

A corporation offers limited liability protection to its shareholders, which means that they are not personally responsible for the company's debts and liabilities. This is a significant advantage over sole proprietorships and partnerships, as it helps protect the shareholders' personal assets. However, corporations are subject to higher taxes than other forms of business entities, and there may be other disadvantages as well. Overall, the decision to operate as a corporation will depend on the specific circumstances and goals of the business.

Why Might a Business Choose to Operate as a Corporation