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Corporate Finance

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Liability Shield for S-Corporations.

CORPFN-HVYBFT

You are thinking about starting a partnership with a colleague to open a hot dog stand. Your accountant suggests that instead of forming a partnership, you form a S-corporation. What benefits would you achieve by doing this?

A

You would be protected against lawsuits above the amount of your investments, and you would only have to pay taxes once on your earnings.

B

You would receive a liability shield, but would need to pay taxes twice.

C

You will get a higher percentage of the profits.

D

It will be easier to raise capital from the stock markets.