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True or False?  Limited liability is a key advantage of partnership and sole...

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Mizdee | Student, Undergraduate | Valedictorian

Posted September 13, 2012 at 1:53 AM via web

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True or False?  Limited liability is a key advantage of partnership and sole proprietorships over corporations.

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted September 13, 2012 at 2:01 AM (Answer #1)

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This statement is false.  In fact, it is the exact opposite of the truth.

Limited liability is not an advantage enjoyed by partnerships and sole proprietorships.  In fact, limited liability is a major reason for a person to incorporate rather than to do business as a sole proprietor.  In sole proprietorships and partnerships, the owners of the firm are completely liable for any debts incurred by the firm.  There is no legal distinction between the person and the business.  The person's assets can be taken to pay for the firm's debts.

This statement is false, then, because limited liability is an advantage of incorporation, not of the other types of ownership mentioned here.

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sarahokoth | Student, Grade 9 | Honors

Posted September 14, 2012 at 11:20 AM (Answer #2)

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false.limited liability is only viable to the limited partners in a partnership business and it is not in sole proprietorship.when a sole proprietor is under a huge debt then he or she will have to sell or give out personal things out of the business to pay the debts.

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