The choice of business entity will determine the investors' liability for the debts of the business.

Question

Quizplus · Accepted Answer

The choice of business entity will determine the extent of liability for the investors or owners of the business. In a sole proprietorship or general partnership, the owners have personal liability for the debts of the business. In a limited liability company (LLC) or corporation, the owners have limited liability and their personal assets are protected from the business debts. Therefore, the choice of business entity has a significant impact on the level of risk investors face.

The Choice of Business Entity Will Determine the Investors' Liability