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 because it is a separate legal entity from its owners, meaning that shareholders are typically not personally liable for business debts. However, it often faces double taxation—once at the corporate level on profits, and again at the individual level when dividends are distributed to shareholders. This is why it is considered to have higher taxes compared to the other ownership structures listed.