Lecture 7

Question 1

What is a sole proprietorship?

Answer 1

An unincorporated business owned by a single individual.

Question 2

When would you be denied a business name for a sole proprietorship?

Answer 2

1. it is inappropriate
2. if there is already a business with the sam name or something very similar

Question 3

What kind of liability does the owner of a sole proprietorship have?

Answer 3

Unlimited liability.

Question 4

What is unlimited liability?

Answer 4

Everything the business is liable for, the individual owner is also liable. When you sue the sole proprietorship, you sue the owner.

Question 5

Are there any measures that can be taken to reduce liability (sole proprietorship)? If so, what are they?

Answer 5

1. liability insurance
2. training employees (less risk of them screwing up)
3. credit proofing

Question 6

What is credit proofing?

Answer 6

transferring all assets to a partner’s name (common law or married) so that if you were sued, they cannot come after your assets.
this must be done BEFORE you incur any liability.

Question 7

What are the liabilities of owners?

Answer 7

1. business liabilities
2. tax liabilities
3. vicarious liability