Jose is a stockholder in a software consulting firm.He gets a share of the earnings of the firm,on which he has to pay taxes.Moreover,the firm pays taxes on its earnings.As an individual,Jose is not legally liable to pay off the debts that might be incurred by the firm.In this scenario,the software consulting firm can be regarded as a _____.
A)sole proprietorship
B)partnership
C)corporation
D)franchise

Question

Quizplus · Accepted Answer

The software consulting firm can be regarded as a corporation because it is a separate legal entity from its shareholders. The shareholders (such as Jose) have limited liability and are not personally responsible for the firm's debts. The firm is also taxed separately from its shareholders, which is a characteristic of a corporation. Sole proprietorships and partnerships do not provide this level of separation between the business and its owners, and franchises refer to a type of business arrangement rather than a legal entity.

Jose Is a Stockholder in a Software Consulting Firm