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Which of the following is a disadvantage of​ corporations?

A. Longevity
B. Ability to raise capital
C. Reporting requirements
D. Limited liability
E. Liquidity

1 Answer

1 vote

Final answer:

A disadvantage of corporations is their limited liability, reporting requirements, and the expenses and complexity involved in forming a corporation.

Step-by-step explanation:

A disadvantage of corporations is limited liability. Shareholder liability is limited to the amount they have invested in the corporation, which means they are not personally responsible for any debts or liabilities of the corporation. This is different from other business structures, like sole proprietorships, where the owner is personally liable for the business's debts.

Reporting requirements are also a disadvantage of corporations. Corporations are required to follow certain rules and regulations set forth by the government. They must keep and file accurate financial records, hold regular shareholder meetings, and comply with other reporting obligations.

Expenses and complexity in forming a corporation are another disadvantage. It can be expensive to set up a corporation, as there are legal and administrative costs involved. Additionally, the process of forming a corporation can be complex, requiring various legal documents, such as articles of incorporation, bylaws, and shareholder agreements.

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