Respuesta :
Answer;
Taxes
A disadvantage of corporations is that shareholders have to pay taxes on profits.
Explanation;
A corporation or public corporation is a form of business unit that is a legal entity, which in usually organized under the laws of a state, and whose investors or share holders purchase shares of stock as evidence of ownership in it.
One of the disadvantages of corporation is double taxation; A corporation may pay taxes on its income, after which the investors or the shareholders pay taxes on dividends earned, and therefore it means the income has been taxed twice.
The disadvantage of the company is that the shareholders are required to pay taxes on the profit.
Further Explanation:
Corporation:
The corporations that are incorporated in United States have to pay tax at a rate 21 percent on the net profit earned by them. The people who are holding the share of the company are referred to as shareholder of the company. They receive dividend on the amount of capital held by them. The dividend is paid proportionately based on the shares held by them.
Taxes on dividend:
The dividend is paid after the deduction of tax from the net profit. This is known as corporate tax. The dividend that shareholder receives is also taxable in the hands of the shareholders and when they sell their share, they are required to pay capital gain tax. Hence, there is double tax on the dividend earned by the shareholders. The total tax rate on both capital gains and dividends is 23.8 percent.
Therefore, the disadvantage of company for the shareholder is that they have to pay tax on the profit.
Learn more:
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Answer details:
Grade: High School
Subject: Business
Chapter: Forms of business organization
Keywords: A disadvantage of corporations is that shareholders have to pay on profits, Taxes, blank on profits, dividend distribution tax.
