Georgia NASCLA Contractor Practice Test

A C Corporation structure is often favored by businesses primarily because of the ease with which ownership can be transferred. In a C Corporation, ownership is represented by shares of stock, which can be sold or transferred to new or existing shareholders more easily than in other business structures, such as partnerships or sole proprietorships. This allows for greater flexibility when it comes to raising capital, as new investors can be brought in through the purchase of shares.

This ease of ownership transfer can be particularly appealing for businesses planning for growth or potential sales, mergers, or acquisitions, as it provides a more straightforward process for transitioning ownership without disrupting the operations of the business.

While simplified taxation and limited personal liability are benefits associated with various business structures, a C Corporation faces double taxation—taxes on both corporate income and dividends—making it less appealing from a taxation perspective. Additionally, C Corporations are often subjected to more stringent financial disclosure requirements than other structures, contradicting the choice that suggests no required financial disclosures.