There Are Several Benefits to Incorporating a Business

question 9

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:

Market-based Economy

An economic system where prices and the distribution of goods are determined by supply and demand in a free market.

Mercantilism

An economic theory prevalent in the 16th to 18th centuries focusing on maximizing a nation's exports and minimizing imports to accumulate wealth and precious metals.

Communism

A political and economic ideology advocating for a classless society in which all property and resources are communally owned and controlled by the public or the state.

Gross Domestic Product

The total value of all goods and services produced over a specific time period within a country's borders.