BUSINESS ADMINISTRATION
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Corporations are owned by only one person
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Corporations can sell stock to raise money for the business.
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Sole proprietorships have limited liability for the owners.
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Sole proprietorships require a legal charter to start the business.
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Detailed explanation-1: -Corporations have an easier time obtaining outside funding than sole proprietorships. Corporations can sell shares of stock and secure additional funding for growth, while sole proprietors can obtain funds only through their personal accounts, using their personal credit or taking on partners.
Detailed explanation-2: -There is no legal distinction between the business and the owner, meaning that any financial or legal obligations are the sole responsibility of the owner. A corporation, on the other hand, separates the owner from the business, and defines the business as its own legal entity.
Detailed explanation-3: -Sole management Sole proprietors have full control over their businesses. They don’t answer to anyone and don’t have any co-owners that hold a stake in the company. That means that they make all the business decisions, but it also means that they can’t sell shares in their business to raise money.
Detailed explanation-4: -Since most corporations sell ownership through publicly traded stock, they can easily raise funds by selling stock. This access to funding is a luxury that other entity types don’t have.
Detailed explanation-5: -Sole Proprietor and Partnership firm They can obtain capital for their business by the following means: Investment of own savings. Raising loans from friends and relatives. Arranging advances from commercial banks.