Question

What are the main advantages and disadvantages of organizing a firm as a​ corporation? ​(Select all the choices that​ apply.) A. ​Disadvantages: Double​ taxation, separation of ownership and control. B. ​Advantages: Limited​ liability, liquidity, separation of ownership and control. C. ​Disadvantages: Double​ taxation, infinite life. D. ​Advantages: Limited​ liability, liquidity, infinite life.

Answer 1

A. Disadvantages: Double taxation, separation of ownership and control.

B. Advantages: Limited liability, liquidity, separation of ownership and control.

Step-by-step explanation:

The corporation has various advantages and disadvantages. Double taxation is a disadvantage of a corporation. The Company pays income tax on its earnings and then shareholders are taxed when the earnings after tax are distributed to then as dividends. The advantage includes that a company has limited liability. The shareholders can only claim the amount they invested in an occasion of bankruptcy or default of a company. The corporations do not have infinite life.