Justin Lapierre decided to operate his own Web design firm and is leaning toward organizing it as a sole proprietorship. What is one factor Justin should realize in choosing this form of business?
A) He will be creating a business that is legally separate and distinct from himself.
B) He will be required to fill out special forms and pay proprietorship fees to get the company legally established.
C) He will incur the problem of double taxation.
D) He will be exposing himself to unlimited personal liability for the company's debts.

Question

Quizplus · Accepted Answer

Justin should realize that as a sole proprietor, he will be personally liable for any debts and obligations of the business. This means that if the business cannot pay its debts, his personal assets (such as his home or car) could be at risk. This is a significant risk factor that should be carefully considered when choosing to operate as a sole proprietor.

Justin Lapierre Decided to Operate His Own Web Design Firm