What is a common reason for choosing a corporation as a business structure?
Practice Questions
1 question
Q1
What is a common reason for choosing a corporation as a business structure?
Simplicity in management
Limited liability for owners
Easier to dissolve
Direct taxation
One of the main reasons for choosing a corporation is the limited liability it offers to its shareholders.
Questions & Step-by-step Solutions
1 item
Q
Q: What is a common reason for choosing a corporation as a business structure?
Solution: One of the main reasons for choosing a corporation is the limited liability it offers to its shareholders.
Steps: 4
Step 1: Understand what a corporation is. A corporation is a legal entity that is separate from its owners (shareholders).
Step 2: Learn about limited liability. Limited liability means that the shareholders are not personally responsible for the debts and liabilities of the corporation.
Step 3: Recognize the benefit of limited liability. If the corporation faces financial trouble or legal issues, the personal assets of the shareholders (like their homes or savings) are protected.
Step 4: Conclude that this protection is a common reason why people choose to form a corporation instead of other business structures.
