In these types of business organizations, businesspeople can avoid unlimited liability.

Prepare for the Tampa Global Business Test 2. Enhance your business acumen with flashcards, multiple-choice questions, and detailed explanations to ace the exam!

The correct answer consists of C corporations, S Corporations, and limited partnerships as these business structures provide limited liability protection to their owners.

In a C corporation, the company is treated as a separate legal entity, meaning that the personal assets of the shareholders are typically protected from the company's debts and liabilities. Similarly, S corporations offer the same liability protection, while also allowing income to pass through to the owners' personal tax returns, thereby avoiding double taxation.

Limited partnerships further enhance liability protection by distinguishing between general partners, who manage the business and have unlimited personal liability, and limited partners, who invest in the business but are only liable up to the amount they have invested. This structure ensures that limited partners can avoid the risk of losing personal assets beyond their investment in the partnership.

In contrast, sole proprietorships expose the owner to unlimited liability, meaning they are personally responsible for all debts and legal obligations of the business. General partnerships also carry unlimited liability for all partners, making them personally liable for the debts incurred by the partnership. Franchises, while often structured with limited liability companies or corporations, can also involve personal liability based on the specific legal structure adopted by the franchisee.

Understanding these distinctions is pivotal for businesspeople when choosing the right form

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy