Question

the disadvantages to starting and running a corporation include:

c. high probability of legal disagreements among owners
d. double taxation
b. easier to secure funding
a. limited liability

Explanation:

Analyze the characteristics of a corporation

A corporation is a distinct legal entity separate from its owners.

Evaluate each option

• high probability of legal disagreements among owners: This is more characteristic of partnerships.
• double taxation: Corporations face taxes on their corporate profits, and shareholders are taxed again on personal dividends. This is a major disadvantage.
• easier to secure funding: This is an advantage of a corporation, not a disadvantage.
• limited liability: This is an advantage that protects owners' personal assets, not a disadvantage.

Identify the correct disadvantage

Double taxation is a well-known disadvantage of the corporate business structure.

Answer:

• a. limited liability
• b. easier to secure funding
• c. high probability of legal disagreements among owners
• d. double taxation (Correct answer)