Florida Contractor Practice Exam

Which of the following is an advantage of owning a corporation?

1. Continuity of existence

2. Lack of centralized control

3. Sharing of ideas and management responsibility

4. Easier to create

The correct answer is: Continuity of existence

Owning a corporation provides the advantage of continuity of existence, which means that the company can continue to exist independently of the shareholders. This characteristic allows a corporation to remain in operation even if ownership changes, such as through the sale of shares or the death of shareholders. This stability is beneficial for long-term planning and attracting investments, as stakeholders can have confidence that the corporation’s existence is not tied to individual owners. In contrast, other options suggest aspects that do not represent an advantage typically associated with a corporation. For example, lack of centralized control may lead to difficulties in decision-making and management inefficiencies, which are not favorable for a corporation. Sharing of ideas and management responsibility can happen in different types of organizations, but this is not a specific advantage of a corporation and often occurs in less formal structures like partnerships. Furthermore, while some may perceive the process of creating a corporation as easier, it actually involves specific legal requirements that can make it more complex than forming other business entities.