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 trader 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 risk that comes with being a sole trader. As a sole trader, Darrell would be personally responsible for any debts or legal issues that his business may face. By incorporating his business, he would limit his personal liability and protect his personal assets in case of a business-related lawsuit or bankruptcy.

Darrell Inherited a Large Amount of Money from His Uncle