Autumn wants to start a business. She has two goals. First, she doesn't have much money but she's ready to get business up and running with the least possible hassle and expense. Second, she wants to minimize her personal risk in the event that her company experiences difficulties. If Autumn chooses a sole proprietorship, she would
A) achieve both goals since this form of ownership is both the easiest to form and the least risky.
B) meet her first goal since sole proprietorships are easy and inexpensive to form. However, she would expose herself to personal risk because owners of sole proprietorships have unlimited liability.
C) not achieve either goal since proprietorships are both costly to set up and subject to unlimited liability.
D) achieve her second goal, since the owners of sole proprietorships are legally protected from losing more than the amount they invest in their company. However, she would find that the start-up costs would be higher than if she had incorporated her business.

Question

Quizplus · Accepted Answer

One advantage of sole proprietorships is that they are relatively easy and inexpensive to start. However, a major disadvantage is that the owner has unlimited personal liability for any debts of the firm. This unlimited liability means that the owner is exposed to a high level of risk.

Autumn Wants to Start a Business