Limited liability is a benefit for the owners of: Group of answer choicessole proprietorships and partnershipspartnershipscompanies/corporationsole proprietorships
Question
Limited liability is a benefit for the owners of: Group of answer choicessole proprietorships and partnershipspartnershipscompanies/corporationsole proprietorships
Solution
Limited liability is a benefit for the owners of companies/corporations.
Here's why:
-
In a sole proprietorship, the owner is personally liable for all the business's debts. This means that if the business can't pay its debts, the owner's personal assets (like their car, house, or savings) could be used to pay off those debts.
-
In a partnership, all partners are personally liable for the business's debts. This means that each partner's personal assets could be used to pay off the business's debts.
-
In a company/corporation, however, the owners (shareholders) have limited liability. This means that they are only liable for the business's debts up to the amount they invested in the company. Their personal assets are not at risk if the company can't pay its debts. This is a major advantage of forming a company/corporation.
Similar Questions
The liability of a limited partner is limited to the amount he or she has put into the partnership.Group of answer choicesTrueFalse
Which form of organization provides limited liability to its owners and allows for easier transfer of ownership? A. Sole Proprietorship B. Partnership C. Corporation D. Limited Liability Partnership
In which form of organization, the liability of the owners is limited to the amount invested in the business? A. Corporation B. Sole proprietorship C. Partnership D. Limited liability partnership (LLP)
Which of the following is an advantage of a Company/Corporation business structure?Group of answer choicesUnlimited liabilityTaxed dependent on incomeLimited liabilityNot very complicated to set up
Limited liability, indefinite length of life, ease of expansion, legal entity, and transfer of ownership are considered advantages of a?Question 4Answera.partnership.b.corporation.c.trade union.d.sole proprietorship.
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.