Autumn Wants to Start a Business

question 328

Multiple Choice

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.

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Definitions:

Public Officials

Individuals elected or appointed to carry out governmental duties and responsibilities.

Give Consideration

To provide something of value such as money, goods, or services as part of a contract or agreement.

Gratuitous

Referring to something given without expecting anything in return, often related to acts of kindness or voluntary transactions without compensation.

Preexisting Duty

A legal concept indicating that if someone is already legally obligated to perform a certain action, that action cannot be used as consideration for a new contract.