1. The first option correctly highlights the pros and cons of each option. In a sole-proprietorship, Ahmed and Jamar have full control over their business but also carry all the liability. Their growth is limited to their available capital. However, as a corporation, they can separate their personal assets from the company's assets, reducing their liability. They also have the option to offer stock options, which can attract investors and accelerate business growth.
2. This option repeats the information mentioned in the first option but presents it in a confusing manner. The statement about a sole-proprietorship's assets being separated from personal assets is incorrect. It is a feature of a corporation, not a sole-proprietorship.
3. This option correctly states the disadvantages of a sole-proprietorship, with full control but also full liability and limited growth potential.
4. This option repeats the information mentioned in the first option in a concise and accurate manner. It accurately presents the advantages of incorporating, including the separation of assets and offering stock options for growth.
Ahmed and Jamar own a successful catering company. Ahmed wants to stay a sole-proprietorship as they expand, but Jamar wants to incorporate. Examine the pros and cons of each option.
1. In a sole-proprietorship, Ahmed and Jamar are in charge of everything, but they are also liable for everything and can only grow as much as their collective capital allows. As a corporation, the company's assets are separated from Ahmed and Jamar's personal assets. This means that there is less liability, and they have the option of offering stock options as a way to grow their business.
2. In a corporation, Ahmed and Jamar are in charge of everything, but they are also liable for everything and can only grow as much as their collective capital allows. In a sole-proprietorship, the company's assets are separated from Ahmed and Jamar's personal assets. This means that there is less liability, and they have the option of offering stock options as a way to grow their business.
3. In a sole-proprietorship, Ahmed and Jamar are in charge of everything, but they are also liable for everything and can only grow as much as their collective capital allows.
4. As a corporation, the company's assets are separated from Ahmed and Jamar's personal assets. This means that there is less liability, and they have the option of offering stock options as a way to grow their business.
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