Ellen Wants to Start a Business

Multiple Choice

Ellen wants to start a business.She is leaning toward setting up her company as a sole proprietorship,but she is also looking at other possibilities.Ellen has two major goals.First,given her limited personal wealth and eagerness to get started,she wants to get her business up and running with the least possible hassle and expense.Second,she wants to minimize her personal risk in the event that her company experiences difficulties.If Ellen chooses a sole proprietorship,she would:

A) achieve her second goal,since the owners of sole proprietorships are legally protected from losing more than the amount they invest in their company.However,she would find that the start-up costs would be higher than if she had incorporated her business.
B) not achieve either goal since proprietorships are both costly to set up and subject to unlimited liability.
C) be able to achieve both goals since this form of ownership is both the easiest to form and the least risky.
D) meet her first goal since sole proprietorships are easy and inexpensive to form.However,she would expose herself to a high level of personal risk because owners of sole proprietorships have unlimited liability.