Which of the following is a disadvantage of forming a corporation?

The correct answer highlights a significant concern when it comes to the financial implications of operating a corporation. Forming a corporation often involves higher ongoing costs compared to other business structures, such as sole proprietorships or partnerships. This includes costs related to compliance with regulatory requirements, such as filing annual reports, maintaining corporate records, and potentially higher accounting and legal fees. Corporations also face more rigid corporate governance rules, which can add to operational expenses.

Understanding these costs is crucial for anyone considering forming a corporation, as they can impact the overall profitability and efficiency of the business. While corporations do provide benefits such as limited liability and potential for raising capital through stock sales, the higher operational costs can be a substantial drawback, particularly for smaller businesses or startups that may be sensitive to these financial burdens.