Asked by Randy Sandoval on May 07, 2024
Verified
Limited liability may not be an advantage of the corporate form for owner-operated small businesses because:
A) a negligent worker can escape liability for his own acts.
B) lenders usually demand personal guarantees from the owners of small businesses.
C) stockholders participate in the business itself.
D) All of these are correct.
Limited Liability
A legal structure that limits the financial liability of the owners to the amount of money they invested in the company.
Corporate Form
A legal structure for a business recognized by law as a separate legal entity from its owners, with its own rights and liabilities distinct from those of its owners.
Owner-Operated
Refers to a business where the owner actively manages and operates the company, often involved in daily tasks and decisions.
- Recognize the advantages and disadvantages of different business forms.
Verified Answer
AL
Alexis Lopez
May 12, 2024
Final Answer :
B
Explanation :
Lenders usually demand personal guarantees from the owners of small businesses, which means that the owners are personally responsible for the debts of the business. Therefore, limited liability may not be considered an advantage for owner-operated small businesses as it does not protect the owners from personal liability. A and C are incorrect as they are not directly related to the limited liability advantage.
Learning Objectives
- Recognize the advantages and disadvantages of different business forms.