Answer:
In terms of individual liability, the three main types of business organizations differ significantly:
Sole proprietorship: In a sole proprietorship, the owner is personally liable for all of the business's debts and obligations. This means that if the business cannot pay its debts, the owner's personal assets (such as their home, car, or savings) may be seized to satisfy the debts.
Partnership: In a partnership, all partners are jointly and severally liable for the business's debts and obligations. This means that each partner is personally responsible for the entire amount of the partnership's debts, not just their share. If one partner cannot pay their share of the debt, the other partners must make up the difference.
Corporation: In a corporation, the owners (shareholders) are generally not personally liable for the corporation's debts and obligations. Their liability is limited to the amount of their investment in the corporation. This means that if the corporation cannot pay its debts, the shareholders' personal assets are generally not at risk.
Overall, a sole proprietorship has the highest level of individual liability, followed by a partnership, and then a corporation. This is one reason why many entrepreneurs choose to incorporate their businesses, in order to limit their personal liability and protect their personal assets.
Step-by-step explanation: