Cheers Inc. operates as a partnership. Now the partners have decided to convert the business into a regular corporation. Which statement about its new firm organization is true?
A) Assuming Cheers is profitable, less of its income will be subject to taxes.
B) Cheers will now be subject to fewer regulations.
C) Cheers' shareholders (the ex-partners) will now be exposed to less liability.
D) Cheers will find it more difficult to raise additional capital.

Question

Quizplus · Accepted Answer

When a partnership converts to a corporation, the shareholders (formerly partners) benefit from limited liability, meaning they are not personally liable for the company's debts beyond their investment in the company.