Discuss the concept of limited liability and how it may influence the type of business entity a person chooses when forming a business. Which ethical norm is consistent with a person who chooses a LLC over a sole proprietorship?
Please use the below reference for the primary source. Additional citations should support.
**Kubasek, N., Brennan, B. & Browne, M. N. (2017) Legal Environment of Business, A Critical
Thinking Approach. New York: Pearson
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Write My Essay For MeDiscuss the Concept of Limited Liability and How It May Influence the Type of Business Entity a Person Chooses When Forming a Business
Limited liability refers to a situation where an individual financial obligation is restricted to a fixed amount, most commonly the sum of a person’s investment in a partnership or company. All the shareholders in limited companies cannot be held personally liable for the debts of the organization (Reuting, 2014). This also applies when dealing with limited shareholders in limited partnerships. By contrast, general partners and sole proprietors are personally liable for the debts of the business.
The limited liability aspect influences the type of business entity an individual chooses when starting a business in the sense that limited liability permit owners to enjoy the various benefits of both the partnership and corporation forms of business. The merits of this type of enterprise are that double taxation does not arise and the owners are protected from personal liability. Other benefits include tax simplicity and flexible management (Kohler, 2015). As for a sole proprietorship, one must consider several disadvantages. Selecting the sole proprietorship form of business implies that the owner is…
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