Question

which of the following could explain why a business might choose to operate as a corporation rather than as a proprietorship or a partnership?

corporations generally find it easier to raise large amounts of capital.

corporations generally face fewer regulations.

corporate shareholders are exposed to unlimited liability, but this factor is offset by the tax advantages of incorporation.

less of a corporations income is generally subject to federal taxes.

corporate investors are exposed to unlimited liability.

Explanation:

Corporations can sell stocks and bonds, which makes raising large - scale capital easier compared to proprietorships and partnerships. Proprietorships and partnerships usually rely on personal savings, loans from friends and family, or bank loans. Corporations face more regulations, not fewer. Corporate shareholders have limited liability, not unlimited. Corporations often face double - taxation (tax on corporate income and then tax on dividends), so it's not true that less of their income is subject to federal taxes.

Answer:

Corporations generally find it easier to raise large amounts of capital.