Consider the following separate situations, identify each as being a sole proprietorship, partnership or corporation.
Consider the following separate situations, identify each as being a sole proprietorship, partnership or corporation.
| Description | Business Organization |
|---|---|
| a. Micah and Nancy own Financial Services, a financial services provider, Neither Micah nor Nancy has personal responsibility for the debes of Financial Services. | |
| b. Riley and Kay own Speedy Packages, a courier service. Both are personally liable for the debts of the business. | |
| c. IBC Services does not have separate legal existence apart from the one person who owns it. | |
| d. Trent Company is owned by Trent Malone, who is personally liable for the company's debts. | |
| e. Ownership of Zander Company is divided into 1,000 shares of stock. | |
| f. Pirysio Products does not pay income taxes and has one owner. | |
| g. AJ Company pays its own income taxes and has two owners. |
Homework Answers
For classifying the given situations, we will consider the following characteristics of corporation, partnership and sole proprietorship.
Corporation: It has separate legal existence and owners are not personally liable for the debts of the company. It issues shares or stock.
Sole proprietorship: It consists of single owner and it has no separate legal existence and owners are personally liable for the company debts.
Partnership: It consists of two or more owners and owners are personally liable.
a. Corporation, because owners are not personally liable.
b. Partnership, because two or more owners who are personally liable.
c. Sole proprietorship, because single owner with no separate legal existence.
d. Sole proprietorship, because single owner with no separate legal existence.
e. Corporation, because it issues shares.
f. Sole proprietorship, because it does not income taxes (means that it has no separate legal existence)
g. Partnership,.as it has iwo owners.
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