Dana Wants to Open Her Own Business After Completing College

question 40

Multiple Choice

Dana wants to open her own business after completing college. As a fine arts student, she is planning to provide services as a graphic artist. Although she is nervous about risking her personal assets, she is thinking about forming a proprietorship. Which of the following provides the best advice for Dana?

• A) Forming a sole proprietorship can help you protect your personal assets, but it is a poor choice for individuals who want to be their own boss because this form of business is heavily regulated.
• B) Forming a sole proprietorship is a great idea. It gives you the ability to be your own boss while also protecting your personal assets from loss.
• C) Forming a sole proprietorship is a bad choice. Not only is a sole proprietorship subject to extensive government regulation that will limit your ability to run your business, it also exposes you to unlimited liability.
• D) Forming a sole proprietorship will enable you to be your own boss. But if you are really nervous about risking your personal assets, you might want to consider some other form of ownership because it will also expose you to unlimited liability.

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Definitions:

Managers

Individuals responsible for planning, directing, and overseeing the operations and employees within an organization to achieve its objectives.

Return on Investment

A metric that indicates the profit or loss incurred from an investment in comparison to the total funds invested.

Stakeholders

Individuals or groups that have an interest or stake in the performance and actions of a company, including employees, customers, suppliers, and investors.

Return On Investment

A measure of the profitability of an investment, calculating the ratio of net profit to the initial cost of investment.