Darrell inherited a large amount of money from his uncle.Darrell wishes to start his own business, and his lawyers encourage him to make it a corporation.What disadvantage of a sole proprietorship are the lawyers trying to avoid?
A) unlimited liability
B) lack of management skills
C) retention of all profits
D) lack of money
E) double taxation

Question

Quizplus · Accepted Answer

The lawyers are trying to avoid the disadvantage of unlimited liability, which is a characteristic of sole proprietorship. As a sole proprietor, Darrell would be personally responsible for all debts and liabilities of the business. By forming a corporation, he would limit his personal liability to the amount of his investment in the business.

Darrell Inherited a Large Amount of Money from His Uncle