Question

1. which of the following are disadvantages of corporations?

unlimited liability
double taxation on profits
more government regulations
difficult to raise capital

Explanation:

• Unlimited liability: Corporations offer limited liability to shareholders, so this is not a disadvantage.
• Double taxation on profits: Corporations are subject to corporate income tax on profits, and then shareholders pay tax on dividends received. This is a disadvantage.
• More government regulations: Corporations are subject to more regulations compared to sole - proprietorships and partnerships, which can be a disadvantage.
• Difficult to raise capital: Corporations can raise capital by issuing stocks and bonds, so this is not a disadvantage.

Answer:

B. Double taxation on profits, C. More government regulations