Darrell inherited a large amount of money from his uncle. Darrell wishes to start his own business, and his lawyers encourage him to make it a corporation. What disadvantage of a sole proprietorship are the lawyers trying to avoid?
A) Unlimited liability
B) Lack of management skills
C) Retention of all profits
D) Lack of money
E) Double taxation

Question

Quizplus · Accepted Answer

By making the business a corporation, Darrell can avoid unlimited liability which would be a disadvantage of a sole proprietorship. As a sole proprietor, Darrell would be personally responsible for any debts or lawsuits against the business. However, with a corporation, the owners have limited liability and their personal assets are protected.

Darrell Inherited a Large Amount of Money from His Uncle