Question

List a few advantages and disadvantages for opening up a company as a corporation.

Answer 1

Advantages of c corpotions

• owners have limited liability. The owners'assets are protected from the debts and liabilities of the corporation shareholders are not held liable for business losses.

• Easier to raise capital. It is easier to attract capital with the sale of stocks and bonds. A corporation can have an unlimited number of investors.

• Easy to transfer ownership. Share of stock can be sold.

Disadvantages of c corporation

• Double taxation of corporations profits. The corporation pays federal and state taxes on its profits. When dividends are paid to shareholders, they are treated as income and taxed again.

• Forming a corporation costs more. Attorneys charge more to from a corporation

• States have higher fees. States charge annual franchise fees a corporation.