Advantages and Disadvantages of Corporations

What is an advantage related to corporations?

Which statement describes an advantage of a corporation?

Which of the following is an advantage of corporate ownership?

What is an advantage concerning stockholders in a corporation?

What is a disadvantage related to ownership in corporations?

Which of the following can be considered a disadvantage of corporations?

What is a disadvantage associated with government regulation of corporations?

What is a disadvantage regarding the startup costs of a corporation?

Advantages of Corporations

Corporations can raise more capital compared to proprietorships or partnerships, enabling large-scale business operations and expansions.
A corporation enjoys a continuous life, meaning it can persist beyond the involvement of individual stockholders or management.
The transfer of ownership in a corporation is streamlined and easy, allowing stockholders to sell or transfer shares without significant complications.
There is no mutual agency among stockholders, meaning individual shareholders do not have authority to obligate the corporation.
Stockholders have limited liability, protecting personal assets from being used to satisfy corporate debts or liabilities.

Disadvantages of Corporations

Ownership and management are often separated, which can lead to conflicts of interest between shareholders and executives.
Earnings generated by a corporation may be subject to double taxation, with profits taxed at both corporate and individual levels when distributed as dividends.
The expensive nature of government regulation can increase operational costs and administrative burdens for corporations.
Startup costs for corporations are higher compared to other business structures, making initial investment more challenging for entrepreneurs.

This quiz explores the key advantages and disadvantages of corporations. Learn about how corporations differ from proprietorships and partnerships in terms of raising capital, continuity, ownership transfer, and agency. Ideal for students studying business law or corporate structures.