Question

A corporations disadvantages are:

1) Corporate earnings may be subject to ____ taxation and
2) setting up a corporation and filing required state and federal reports is complex.

a) No
b) Double
c) Triple
d) Variable

Answer 1

The disadvantages of a corporation include double taxation of corporate earnings and the complexity and expense involved in setting up the corporation and filing necessary reports.

Step-by-step explanation:

The disadvantages of a corporation highlight several key issues that affect such a business structure. One major disadvantage is double taxation, where corporate earnings may be subject to double taxation. This occurs because the business itself is taxed on its profits, and then the dividends paid to shareholders are also taxed as individual income. Additionally, setting up a corporation and handling the complex requirements for state and federal reporting can be more complicated and expensive when compared to other business entities like sole proprietorships or partnerships. Corporations face a multitude of taxes including property tax, payroll tax, and excise tax; however, these are not categorized as corporate taxes.