Question

1. Explain the concept of unlimited liability as it relates to sole proprietorships.
2. What is the most important difference (the defining features) between a cooperative and all other business structure types?

Answer 1

1. Unlimited liability applies to general partners and sole proprietors ' legal obligations because if the company can not pay its liabilities, they are responsible for all business debts. In other words, general partners and joint shareholders are responsible for the payment of all business obligations if the company is unable to meet its payments. The business owners are unlimitedly responsible for all business behavior in this context. Lawsuits create a major challenge for unlimited liability partners. For example, the customer could sue the business if a customer slips and falls injuring himself in your store. The customer can sue the general partners if the business does not have enough money to pay the judgment. If the general partners do not have enough money to pay for the suit, the court may order the general partners to sell personal assets to settle the suit, such as houses and cars. Corporations are offering limited liability to shareholders. This means the owners do not guarantee the corporate debt and can not be forced to pay off corporate debt. Only in the stock itself can corporate shareholders lose their investment. For this purpose, they are considered to have limited liability. No investment will completely eliminate liability, but corporate and LLC structures will help maximize the protection of liability.

2. Cooperatives, also referred to as cooperatives, are organisations whose participants work to accomplish a common objective. Participants would usually join a group to achieve goals they would not be able to achieve on their own. Cooperative membership can be made up of individuals or can be made up of a group of companies. While similar to other organizations, cooperatives vary in a number of different ways from conventional businesses and partnerships.

One of the main differences between a cooperative and a conventional company is that the cooperative is egalitarian, not hierarchical, in structure and management. Although traditional organizations are managed by a top-down management system in which the majority of decisions are taken by one person or a group of people at the top of the organizational hierarchy, all members make collective decisions. While some members may be given special rights, these powers will only be granted if the members agree to do so.

Co-ops often have employees, like regular businesses, who are paid a set wage. Much of a co-op's work, however, is done by members who volunteer their services. For example, members may be required to work a number of shifts every month in a supermarket co-op to retain their membership. While some volunteers may be welcomed by a regular business, the majority of the work is performed by paid employees.