Question

hich of the following statements is CORRECT? (A) One advantage of corporations is that they avoid double taxation. (B) One advantage of a sole proprietorship is that the owner is exposed to unlimited liabilities. (C) One advantage of an LLC is that its owner has only limited liabilities. (D) One advantage of the C corp is that it avoids double taxation.

Answer 1

Answer: (C) One advantage of an LLC is that its owner has only limited liabilities.

Explanation:

A Limited Liability Company (LLC) has the main advantage of its owners having only a limited liability when it comes to debts and liabilities. This is because the LLC is a bit of a mixture between a partnership and a corporation.

This mix results from the fact that LLCs are formed by partners but their personal assets will be separated from the business like in Corporations which means that in case of default, only the assets they brought into the business will be targeted.