BUSINESS ADMINISTRATION
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Contracts are needed to start the businesses
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Owners have complete control of the business.
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Owners have limited legal liability.
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The businesses are owned by one person.
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Detailed explanation-1: -The reason business owners of sole proprietorships and partnerships are subject to unlimited liability is because both business structures do not create a separate legal entity. The owners and the business are one entity.
Detailed explanation-2: -Partnerships can be very similar to Sole Proprietorships in the sense that the business is not necessarily an independent entity; in the simplest form of Partnership, all partners contribute capital and all are fully liable for business debts.
Detailed explanation-3: -Sole proprietors have unlimited liability and are legally responsible for all debts against the business. Their business and personal assets are at risk. May be at a disadvantage in raising funds and are often limited to using funds from personal savings or consumer loans.
Detailed explanation-4: -Unlimited liability typically exists in general partnerships and sole proprietorships.