Question

Which of the following is probably the most important reason for incorporating? *​

Answer 1

hii mate

That means personal assets and savings can be at risk. One important reason for incorporating a company or forming an LLC is to protect the owners/stockholders against personal liability. These official business structures put a wall between the owner and the business.

Answer 2

a. limited liability of shareholders.

limited liability of shareholders is probably the most important reason for incorporating.

• With a limited liability structure, shareholders or directors are only held liable for the obligations of their firm to the extent that their shares are worth. The amount of indebtedness for which the directors are responsible is limited to the value of the shares they own in the company.
• Unlimited liability suggests that the shareholder or partner is responsible for the company's success, whereas limited liability delineates and protects personal assets from corporate assets. The unlimited liability partner would be liable for paying off all debts to creditors if the business went bankrupt.
• For businesses, limited liability is crucial since it facilitates capital raising. Investors that have limited responsibility only run the risk of losing their share investment. So, if shareholders are confident they won't lose their personal assets, they are more likely to invest in a company.
• One of the most crucial aspects of incorporation is the limitation of a shareholder's liability. It promotes investment in the business and draws new investors who are assured that, in the event the firm fails, they will only lose the value of their initial ownership.

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