Which is an advantage of corporations relative to partnerships and sole proprietorships?

NetherCraft 0

Which of the following is an advantage of corporations relative
to partnerships and sole proprietorships?

a) most common form of organization

b) reduced legal liability for investors

c) lower taxes

d) harder to transfer ownership

Answer

Answer- Option B- Reduced legal  liability for
investors

SInce a corporation is a separate entity, the company owners
have limited liability. They have to satisfy any obligations owed
to them, and not to the shareholders. It implies that the
corporation’s creditors cannot reach the shareholders’ assets to
satisfy the company’s debts and obligations. The shareholders
exposure to loss is limited to their investment in the corporation,
which is not the case in partnerships and sole proprietorships
where there is more liability for investors.

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