1 Why do you suppose that a brandnew firm rarely begins as a

1. Why do you suppose that a brand-new firm rarely begins as a publicly held corporation?

2. How might tougher regulations and higher tax rates disuade establishment of new business proprietorships and partnerships?

Solution

1.

A brand-new firm might be inexperienced in the field of business, whereas holding a corporation requires huge experience and capabilities. Therefore, starting with a corporation by a brand-new firm would be risky.

Corporation requires huge capital investments, which a brand-new firm can’t arrange. Therefore, starting as a corporation is not possible by a brand-new firm.