CFA Level I · CFA Level I Exam · Organizational Forms, Corporate Issuer Features, and Ownership
A founder owns a business that is not legally separate from her, so she personally bears unlimited liability for its debts. Her business is most likely organized as a:
The business is most likely a sole proprietorship. In this form the owner and the business are one legal person, so the owner is personally liable for all debts. Corporations and limited liability companies shield owners' personal assets.
- Asole proprietorshipCorrect
- Bpublic corporation
- Climited liability company
Explanation
A sole proprietorship has no legal separation between owner and business, so the owner has unlimited personal liability. Corporations and LLCs provide limited liability to owners.
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