Which of the following business ownership structures offers the best liability protection but higher taxes? A. Nonprofit corporation B. C corporation C. Partnership D. Sole proprietorship.
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Which of the following business ownership structures offers the best liability protection but higher taxes? A. Nonprofit corporation B. C corporation C. Partnership D. Sole proprietorship.
The correct answer is B. C corporation.
A C corporation offers the best liability protection since it is a separate legal entity from its owners, which means shareholders are generally not personally liable for the debts and liabilities of the corporation. However, C corporations are subject to double taxation: the corporation pays taxes on its income, and then shareholders pay taxes again on dividends received. This structure is ideal for businesses that seek to limit personal liability but are willing to face higher taxes.
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