What is a key advantage of a Limited Liability Company (LLC) over a sole proprie

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Question: What is a key advantage of a Limited Liability Company (LLC) over a sole proprietorship?

Options:

Correct Answer: Limited personal liability

Solution:

An LLC provides limited personal liability to its owners, protecting their personal assets from business debts.

What is a key advantage of a Limited Liability Company (LLC) over a sole proprietorship?

What is a key advantage of a Limited Liability Company (LLC) over a sole proprietorship?

Step 1: Understand what a sole proprietorship is. It is a business owned by one person who is personally responsible for all debts.
Step 2: Learn about an LLC (Limited Liability Company). It is a business structure that protects its owners from personal liability.
Step 3: Compare the two. In a sole proprietorship, if the business has debts, the owner's personal assets (like their house or savings) can be taken to pay those debts.
Step 4: In an LLC, the owners (called members) are not personally responsible for the business's debts. This means their personal assets are protected.
Step 5: Conclude that the key advantage of an LLC over a sole proprietorship is this protection from personal liability.

Limited Liability – An LLC protects its owners' personal assets from business liabilities, unlike a sole proprietorship where owners are personally liable.