Question

Mary Wu, the proprietor of Quality Environmental Services, is wondering how she should organize her new business. Answer the following questions about the different ways in which Mary might organize the business. Explain answer a. What form of organization will enable Mary to limit her risk of loss to the amount she has invested in the business? b. What form of business organization will give Mary 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 liabilities? d. If you were Mary and could organize the business as you wish, what form of organization would you choose for Quality Environmental? a. What form of organization will enable Mary to limit her risk of loss to the amount she has invested in the business? because if the fails and cannot pay its liabilities, creditors Therefore, the most an investor can expect to lose on an investment in this type of is the amount invested b. What form of business organization will give Mary the most freedom to manage the business as she wishes? A will give Mary the most freedom to manage the business as she wishes. Under this form there c. What form of organization will give creditors the maximum protection in the event that Quality Environmental fails and cannot pay its liabilities? If a fails and cannot pay its liabilities, creditors can This affords more protection to creditors because there Hora Morandid ninanive the hornece en wich what im of Armanistin dun chance for us nulennmental

Answer 1

a) Limited liability company business because if the company fails and it cannot pay its liability like- creditors, external loans etc., the outsider can lose their money. Mary will be responsible to the the maximum of her share holding in the company.

We know that in limited liability company, members are responsible to pay upto their investment in shares irrespective to the liability.

b) Sole trade business organization will give Mary the most freedom as in such type of business there is only one person who is completely free to take all the decisions regarding business.

c) A partnership firm can give more protection to creditors as they can collect their money from personal assets of partner. So money invested by creditors is safe in partnership firm.

As we know that under Partnership business liabilities of partner is unlimited. It means that in case of loss, liability will be paid off from the personal Assets of the partners.

d) I decided sole trade business if I would be marry because at initial stage It requires less investment. in addition to it I could take all decisions myself . I could have some employees for my help in the business.

Thanks & all the best....