ENTREPRENEURIAL PLANNING
FINANCIAL PLANNING AND ANALYSIS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False
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Either A or B
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None of the above
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Detailed explanation-1: -An unlimited liability company involves general partners and sole proprietors who are equally responsible for all debt and liabilities accrued by the business. Most companies opt to form limited partnerships, where a partner’s liability cannot exceed their investment in the company.
Detailed explanation-2: -Sole proprietorships do not have the protection of limited liability. Instead, the sole owner has unlimited liability. This means that the sole owner is personally liable for the debts and expenses of the business. If the business is sued, the sole owner risks losing their personal assets.
Detailed explanation-3: -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.