Chapter 5 Study Guide
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- 2015.05.01
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1. Most people who start businesses in the U.S. are sole proprietors. What are the advantages and disadvantages of sole proprietorships?
Many people do not have capital to run their own business. They try to have liability apart from their owners.
2. Why would unlimited liability be considered a major drawback to sole proprietorships?
Various kinds of debts or damages which are incurred by the business are their own debts, and people must pay them
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7. If you buy stock in a corporation and someone gets injured by one of the corporation’s products, can you be sued? Why or why not?
No. In conventional corporation, a state-chartered legal entity with authority to act and have liability separate from its stockholders, so I cannot be sued.
8. Why are so many new businesses choosing a limited liability company (LLC) form of ownership?
LLC do not have to comply with ownership restrictions as S corporations do and have to submit articles of organization, which are similar to articles of incorporation, but they are not required to keep minutes, file written resolutions, or hold annual meetings.
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