What is a significant disadvantage of a corporation?

A significant disadvantage of a corporation is its unfavorable tax treatment for stockholders. Corporations often face double taxation, where profits are taxed at the corporate level and then again at the individual level when dividends are distributed to stockholders. This can be a deterrent for investors as it reduces their overall returns compared to other business structures, such as partnerships or sole proprietorships, where income is typically only taxed once at the owner’s personal income tax rate.

In contrast, lower legal liability for stockholders is generally seen as an advantage of corporations, as it protects individual investors from being personally responsible for the business's debts. Higher personal involvement is often a characteristic of smaller businesses and does not apply to corporations where stockholders may not be directly involved in day-to-day operations. Lastly, while corporations can have easier access to capital through issuing stock, this characteristic does not represent a disadvantage, but rather an advantage in fundraising efforts.