Which Of The Following Is One Disadvantage Of Incorporation

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Question

4) which of the following is one disadvantage of incorporation? A) limited liability for owners. B)potential loss of control by founders. C)transferable ownership. D)long life.

Answer

B) The potential loss of control by founders.The incorporation of a company involves the taking over of the ownership of a company by persons who were essentially not engaged with the founding of the Company. This might happen due to several factors such as financial constraints, or differences of opinion among the founders or financial losses occurred by the Company.Further Explanation: Disadvantages of incorporation include the following: -Cost- While filing for incorporation of a Company, certain costs will have to be incurred, which includes fees required to file articles of incorporation, which is basically the business information and the registration details of the Company with the State under which it is registered. It also covers potential attorney fees, legal procedures, and paperwork, using the services of an incorporation office.  Double Taxation- Certain Companies have the potential to result in Double Taxation. Double taxation occurs when both the profits of the Company and the Dividends paid to the Shareholders. Double Taxation is the income tax that is accrued on the same source of income. Double taxation is considered a major disadvantage and is a negative element of the taxation system. It occurs since Corporations are considered separate entities from their shareholders.Incorporation results in loss of personal control by the founders and are replaced by a board of directors who are elected by the shareholders. The board of directors has to include the personal and economic interests of the shareholders while making decisions with regard to the Corporation. A certain structure and framework are to be maintained while registering the Corporation with the State.There is a considerable volume of paperwork involved with the incorporation of paperwork that involves registration, securing of a Corporate license, tax records, accounting files and minutes of meetings, while a significant amount of time and money is involved in dissolution.Learn more:1. When trying officials who have been impeached by the house of representatives? tophomeworkanswers.com.com/question/16014452. How did the ruling in plessy v. ferguson affect the legalities of segregation? tophomeworkanswers.com.com/question/6242334Answer Details-:Level: High SchoolChapter: Economy, Corporations, and Trade.Subject: Economics.Additional Remarks:Advantages and disadvantages of incorporation of a Company are constituted within the subject of Economics. Other important themes engaged with this chapter are Utility, Demand and Supply, types of Corporations, Banking, and finance, Loans and types of Markets.Keywords:Financial constraints, double taxation, incorporation, loss of personal control, the board of directors, shareholders, registration, Corporate license, tax records.

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