Question

Merits and demerits of form of business organization

Answer 1

Answer:

Advantages of a business organisation

It can raise additional funds through the sale of stock.

Shareholders can easily transfer the ownership by selling their stock.

Individual owner’ liability is limited to the value of stock they are holding in the corporation.

Disadvantages of a business organisation

It is restricted by more regulations, more closely monitored by governmental agencies and are more costly to incorporate than other forms of the organizations.

Profit of the business is taxed by the corporate tax rate. Dividends paid to shareholders are not deductible from corporate income, so this part of income is taxed twice as the shareholders must declare dividends as their personal income and pay personal income taxes too.