What forms of organization will enable the owners of Quality Environmental to limit their risk of

QUESTION

Quality Environmental, Inc., needs funds, and Martha Beard, the president, has asked you to consider investing in the business. Answer the following questions about the different ways that Beard might organize the business. Explain each answer.
a. What forms of organization will enable the owners of Quality Environmental to limit their risk of loss to the amounts they have invested in the business?
b. What form of business organization will give Beard the most freedom to manage the business as she wishes?
c. What form of organization will give creditors the maximum protection in the event that Quality Environmental fails and cannot pay its debts?
a. What forms of organization will enable the owners of Quality Environmental to limit their risk of loss to the amounts they have invested in the business? Ans. Corporations and Limited Liability Companies will enable the owneres of the Quality Environmental to limit their risk of loss to the amounts they hgave invested in the business as the members are not personally liable for business debts unlike Proprietorship or Partnership where the owners are personally liable. The owners are either members or stockholders. b. What form of business organization will give Beard the most freedom to manage the business as she wishes? Ans. Proprietorship is the form of business organization which will give Beard the most freedom to manage the business as she wishes as in Proprietorship, the owner would not have to worry about

her owners as the business would have single owner c. What form of organization will give creditors the maximum protection in the event that Quality Environmental fails and cannot pay its debts? Ans. Partnership firm gives the creditors the maximum protection in the event that Quality Environmental fails and cannot pay its debts as the owners are personally liable and also the number of owners are more when compared to Proprietorship which has only single owner. Therefore, partnership has advantage both in terms of Liability and number of owners.

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