There Are Several Benefits to Incorporating a Business

question 2

Multiple Choice

There are several benefits to incorporating a business.Which of the following is NOT a benefit of incorporating?

• A)The small business deduction provides a tax reduction on the first $500,000 of active business income.
• B)Dividends paid to shareholders are deductible business expenses.
• C)There is greater flexibility to bring family members on board as owners.
• D)The owner/employee may participate in a registered pension plan through the corporation.

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Definitions:

Finance Company

A business that makes loans to individuals and commercial customers, distinct from banks and other traditional financial institutions.

Borrowing Company

A company that takes out a loan or issues debt securities to finance its operations or projects.

Aging of Accounts Receivable

The process of categorizing accounts receivable by their due dates to estimate the amount of bad debts.

Estimated Net Realizable Value

The anticipated fair value of an asset in terms of the amount for which it could be sold, minus the estimated costs of sale or disposal.