Angelica wants to open a restaurant and is thinking of setting it up as a corporation. What are the advantages and disadvantages she will face by setting up the business as a corporation as opposed to a sole proprietorship or a partnership?
What will be an ideal response?
As a corporation, Angelica has the advantages of limited personal liability and a greater ability to raise funds. The disadvantages include the cost to organize the business as well as the possible double taxation of income at both the corporate level and at the income level for shareholders who earn dividends.
You might also like to view...
A "great merger movement," whereby firms combined with former rivals to become large firms, began in the 1890s. Who was the first President to look to bigger government as a way to cope with the economic power of these concentrated industries?
(a) Woodrow Wilson (b) Herbert Hoover (c) Theodore Roosevelt (d) Franklin Roosevelt
If a bond's coupon adjusts to pay a constant real rate of return, then an increase in inflation would cause
A) the nominal coupon payment to rise. B) the nominal coupon payment to fall. C) the nominal coupon payment to remain unchanged. D) the bond's price to fluctuate wildly.