in which of the following firm structure compliance cost is maximum a)sole proprietorship b)ltd liability partnership c)pvt ltd company d)public ltd company
Answers
Maximum compliance cost is needed for structuring the sole proprietorship firms because here one person or the owner needs to take all risks.
If there is any loss occur within the company then the owner need to bear the expenses.
On the other hand, limited liability partnership and private limited company should be registered under the ministry of corporate affair, and there are two or more partners can work together.
Firm structure: A firm structure or business structure is a format that is legally recognized and characterized by the legal definition of that particular category.
There are many types of business structures. Some of them are,
- Sole Proprietorship
- General Partnership
- Limited Partnership
- Limited Liability Partnership (LLP)
- Limited Liability Limited Partnership (LLLP)
- Trust
- Joint Venture
Sole proprietorship: An individual or a couple in business which is simple to form and operate is called Sole proprietorship.
It provides greater flexibility, few legal controls, and less taxes.
However, the owner is liable for all debts and costs incurred by the business.
Hence, in a Sole proprietorship the compliance cost is maximum.
The answer is (a) Sole proprietorship