Assume you and your spouse are starting a business that you think will make a la
ID: 2573054 • Letter: A
Question
Assume you and your spouse are starting a business that you think will make a large profit from very beginning. The business will have medium liability risk. You have personal asset of around half a million dollars. Which type of organization would you choose(corporation, S- corporation, partnership,or sole proprietorship)?why? Assume you and your spouse are starting a business that you think will make a large profit from very beginning. The business will have medium liability risk. You have personal asset of around half a million dollars. Which type of organization would you choose(corporation, S- corporation, partnership,or sole proprietorship)?why?Explanation / Answer
In Such Scenario partnership will be suitable form of organization.
Because in case of sole proprietorship, the liability is not only limited to the capital invested by the sole trader but also his private property attached to it.
in case of corporation, the liability is limited to the face value of the share, but due to legal formalities it will take much longer time to form as compared to partnership.
However in case of Partnership it is easy to form and the liability risk will be moderate.