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Author Question: It is possible to establish a corporation by a simple verbal agreement. Indicate whether the ... (Read 152 times)

chandani

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on: Jul 14, 2018
It is possible to establish a corporation by a simple verbal agreement.
 
 Indicate whether the statement is true or false

Question 2

Why is the concept of unlimited liability a concern for the sole proprietor?


Christopher

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Reply #1 on: Jul 14, 2018
Answer to Question 1

False

Answer to Question 2

Unlimited liability is a legal concept that holds a business owner personally responsible for all the debts of the business. Debts of the business are not legally separated or different from the debts of the sole proprietor. Therefore, if the business is involved in a lawsuit or sustains substantial loss or debt, the sole proprietor is legally responsible and personal assets can be seized to pay creditors. Unlimited liability is perhaps the major factor that tends to discourage would-be entrepreneurs with substantial personal wealth from using the sole proprietor form of business organization.


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