Nidal has an idea for a new technology company. He knows the technology industry is constantly changing and in order to be successful his company will require a large amount of capital to keep up with the changes. Which of the following is the best choice for Nidal?
A) a partnership, because Nidal will need someone to help generate ideas for the business
B) a corporation, because it is easiest to exchange shares of ownership for investment capital
C) a sole proprietorship, because it will be easiest for Nidal to remain in control
D) a partnership, because it is easiest to exchange shares of ownership for investment capital

Question

Quizplus · Accepted Answer

A corporation is the best choice for Nidal because it is the easiest way to raise investment capital through the sale of shares of ownership (stocks). Additionally, a corporation provides limited liability protection for its owners, meaning that Nidal's personal assets would not be at risk in case of any financial or legal issues with the company. However, a partnership or sole proprietorship would not be ideal for Nidal's company as they do not offer the same level of liability protection and may make it more difficult to raise the necessary capital.

Nidal Has an Idea for a New Technology Company