Sam and Nina want to start a dry-cleaning service and need to decide on the best form of business ownership, based on their respective abilities and the kind of business they want to run. They could either jointly own the business as a partnership, or one of them could own it as a sole proprietorship. Which of the following, if true, would strengthen the case for Nina running the business as a sole proprietorship?

Question

Quizplus · Accepted Answer

If Sam is not willing to take on legal liability in the company, it would make more sense for Nina to run the business as a sole proprietorship. With a partnership, both partners are generally jointly and severally liable, meaning that they can both be held responsible for any legal issues that arise. In a sole proprietorship, the owner is responsible for all legal issues, which could be beneficial for Nina if Sam is not willing to take on that risk. None of the other options necessarily strengthen the case for Nina running the business as a sole proprietorship.

Sam and Nina Want to Start a Dry-Cleaning Service and Need