Question

In states where an LLC may be organized by only one member, who can obtain the benefit of the limited liability shield of an LLC?

1) LLPs
2) sole proprietors
3) general partnerships
4) corporations

Answer 1

The individual who can obtain the limited liability shield of an LLC in states where it can be formed by one member is a sole proprietor. This structure protects the owner's personal assets from the business's liabilities, unlike other business forms such as a general partnership. The correct answer is Option2) sole proprietors

Step-by-step explanation:

In states where an LLC (Limited Liability Company) can be formed with only one member, that single member, who may be referred to as the sole member or owner of the LLC, can obtain the benefit of the limited liability shield offered by the LLC structure.

Therefore, the correct answer is:

2) Sole proprietors

In this scenario, a sole proprietor, by forming an LLC with only themselves as the single member, can gain the advantage of limited liability protection. This protection helps to separate the individual's personal assets from the liabilities and debts of the business entity, offering limited liability protection similar to that enjoyed by multiple-member LLCs. This shield helps safeguard the owner's personal assets in case the LLC encounters legal issues or financial liabilities.