Ace The Introductory Business Law CLEP 2026 – Smash Your Way to Success!

Question: 1 / 400

What is a primary advantage of forming a corporation?

Limited liability

A primary advantage of forming a corporation is that it offers limited liability to its owners. This means that the personal assets of the shareholders are protected from the debts and liabilities of the corporation. As for the other options, lower tax rate and dividend distribution are not exclusive to corporations and can be applicable to other business entities. Preferred stock may provide certain benefits, but it does not apply to all corporations and is not the main advantage of forming one.

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Lower tax rate

Preferred stock

Dividend distribution

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