One disadvantage of a limited liability company is that it

The following is one disadvantage of incorporation: B)potential loss of control by founders

Further explanation

Disadvantages of Incorporation of a Company  are:

  1. Cost. The initial cost of incorporation includes the fee required to file your articles of incorporation, potential attorney
  2. Double Taxation. Some types of corporations such as a C Corporation, have the potential to result in double taxation.
  3. Loss of Personal “Ownership”.  If a corporation is a stock corporation, one person doesn’t retain complete control of the entity.
  4. Required Structure.  When you form a corporation, you are required to follow all of the rules outlined by the state in which you filed.
  5. Ongoing Paperwork. Most corporations are required to file annual reports on the financial status of the company.
  6. Difficulty Dissolving. While perpetual existence is a benefit of incorporating, it can also be a disadvantage because it can require significant time and money to complete the necessary procedures
  7. Lifting of Corporate Veil.  From the juristic point of view, a company is a legal person distinct from its members

Learn more

  1. Learn more about incorporation
  2. Learn more about limited liability
  3. Learn more about transferable ownership

Answer details

Grade:  9

Subject:  history

Chapter:  incorporation

Keywords: disadvantage, incorporation, transferable ownership, long life, liability

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