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A limited-liability company extends the concept of personal-asset protection to small business owners.

A) True
B) False

User Oligofren
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1 Answer

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Final answer:

The statement is true; an LLC protects small business owners' personal assets from the company's liabilities, just as a corporation does for its shareholders.

Step-by-step explanation:

The statement A limited-liability company extends the concept of personal-asset protection to small business owners is True. A limited-liability company (LLC) structure ensures that the personal assets of the business owners, such as home, car, and personal bank accounts, are protected. This means that individual owners are not personally responsible for the company's debts and liabilities.

In comparison to a sole proprietorship, where the owner has unlimited liability and is personally responsible for all debts and obligations, forming an LLC provides significant protection. However, it differs from partnerships where partners can be liable for the actions of each other. An LLC allows owners to take risks without the fear of losing more than their investment in the company, and this protection is crucial for attracting investors and managing risks.

Similarly, corporations also offer protection to their shareholders, limiting their liability to the amount invested in the company. This helps with raising capital for business expansion through selling stock or borrowing funds.

User Case
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