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Homework answers / question archive / With starting a business, what tax considerations might cause you to prefer to set it up as a proprietorship or a partnership rather than as a corporation?

With starting a business, what tax considerations might cause you to prefer to set it up as a proprietorship or a partnership rather than as a corporation?

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With starting a business, what tax considerations might cause you to prefer to set it up as a proprietorship or a partnership rather than as a corporation?

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  • Double taxation: Corporations pay taxes on the income earned from their operations. After that, the shareholders are also taxed on the dividends paid to them by the corporation from the profits gained.
  • The dividends paid to stakeholders are not tax-deductible from the income. This is disadvantageous to the corporation.
  • Excessive filing of tax: Corporations are involved in the payment of a wide range of taxes and earns several kinds of income. Because of this, they have a considerable mass of paperwork that is not needed by either partnership or sole proprietorship.

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