Corporate form of business is where an entity is owned by a small or large group of people ,called owners /shareholders ,each of whose liability is limited by shares--subject to laws of the state in which it operates. It has access to finance through issue of shares in the public It is a separate legal entity ,distinct from its shareholders.So, unlike ,sole-proprietorships& partnerships, the shareholders are not personally liable,if the business goes into liquidation. But,the primary disadvantage of this type of business form is double taxation of earnings & dividends of the company. ie. Any distribution of profits to shareholders ,is only from after- tax(corporate tax rate) income of the company. But they are also taxed at the personal level,on receipt of dividends,at the hands of the shareholders.So, the shareholder is subject to double taxation . So, ANSWER: b) double taxation Solution Corporate form of business is where an entity is owned by a small or large group of people ,called owners /shareholders ,each of whose liability is limited by shares--subject to laws of the state in which it operates. It has access to finance through issue of shares in the public It is a separate legal entity ,distinct from its shareholders.So, unlike ,sole-proprietorships& partnerships, the shareholders are not personally liable,if the business goes into liquidation. But,the primary disadvantage of this type of business form is double taxation of earnings & dividends of the company. ie. Any distribution of profits to shareholders ,is only from after- tax(corporate tax rate) income of the company. But they are also taxed at the personal level,on receipt of dividends,at the hands of the shareholders.So, the shareholder is subject to double taxation . So, ANSWER: b) double taxation.

1. Corporate form of business is where an entity is owned by a small or large group of people
,called owners /shareholders ,each of whose liability is limited by shares--subject to laws of the
state in which it operates. It has access to finance through issue of shares in the public It is a
separate legal entity ,distinct from its shareholders.So, unlike ,sole-proprietorships&
partnerships, the shareholders are not personally liable,if the business goes into liquidation.
But,the primary disadvantage of this type of business form is double taxation of earnings &
dividends of the company. ie. Any distribution of profits to shareholders ,is only from after-
tax(corporate tax rate) income of the company. But they are also taxed at the personal level,on
receipt of dividends,at the hands of the shareholders.So, the shareholder is subject to double
taxation . So, ANSWER: b) double taxation
Solution
Corporate form of business is where an entity is owned by a small or large group of people
,called owners /shareholders ,each of whose liability is limited by shares--subject to laws of the
state in which it operates. It has access to finance through issue of shares in the public It is a
separate legal entity ,distinct from its shareholders.So, unlike ,sole-proprietorships&
partnerships, the shareholders are not personally liable,if the business goes into liquidation.
But,the primary disadvantage of this type of business form is double taxation of earnings &
dividends of the company. ie. Any distribution of profits to shareholders ,is only from after-
tax(corporate tax rate) income of the company. But they are also taxed at the personal level,on
receipt of dividends,at the hands of the shareholders.So, the shareholder is subject to double
taxation . So, ANSWER: b) double taxation