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Compared to sole proprietorship and partnership, which of the following is a major advantage of a...

Compared to sole proprietorship and partnership, which of the following is a major advantage of a corporation. A. Low start-up costs, B. Direct control, C. Double Taxation, D. Limited liabilities, E. None of the above

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Answer #1

The major advantage of corporation over sole proprietorship and partnership is that corporation has limited liability. If any sole proprietorship or partnership firm defaults on debt then it is its owner responsibility to pay the debt, in case they can't pay debt debt then lender can liquidate the owners personal asset to recover loan.

Whereas in case of corporation if it defaults on debt then lender can recover loan only by liquidating assets of company only, they cannot recover debt from personal asset of owner or shareholders.

So Option D is correct.

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