Types of Business Organizations and Liability for Each Owner
What are the types of business organizations arranged from the most liability for each owner to the least liability for each owner?
A. Partnership - Sole proprietorship Corporation
B. Corporation
Sole proprietorship - Partnership
C. Sole proprietorship - Partnership - Corporation
D. Corporation - Partnership - Sole proprietorship
Answer: C. Sole proprietorship-partnership- corporation
Explanation:
Sole proprietorship, Partnership, and Corporation are the business organization kinds that are arranged from the highest level of owner liability to the lowest level. Therefore, choice (C) is the appropriate response.
Sole proprietorship:
A sole proprietorship, sometimes referred to as a sole tradership, individual entrepreneurship, or proprietorship, is a kind of business that is owned and operated by only one person and in which there is no formal separation of the owner's personal and commercial affairs. Even though they may work alone, solo proprietors occasionally hire staff.
The lone proprietor is solely responsible for all losses and debts, and any earnings are given to him or her (subject to business-specific taxes). The owner of the firm is the sole owner of all of the company's assets, and he or she is also the only party liable for any debts incurred by the company. A partnership, on the other hand, requires at least two owners, whereas the arrangement is a "sole" proprietorship.