Why there is unlimited liability for the sole proprietorship and limited liability for the joint stock company?
please me the answer ?
Answers
Explanation:
Explanation:Unlimited liability refers to the legal obligations general partners and sole proprietors because they are liable for all business debts if the business can’t pay its liabilities. In other words, general partners and sole proprietors are responsible for paying off all of the company debts personally if the company can’t make its payments.
Answer:
The Unlimited Liability for the Sole Proprietorship and Limited Liability for the Joint-Stock Company.
EXPLANATION -
The above statement talks about the two different patterns of business conduct.
A Sole Proprietorship is a form of business conduct were all the responsibilities are fulfilled by the owner of the company. He/She is the one who is in charge of Managing, Owning and Running it. The business and the owner has therefore no different entity in business.
The Joint-Stock Company is a form of business where a group of people came across the table for a business prospectus with the mind of earning a profit. The company appoints a manager for the management of several business activities. Here, the business and the owner doesn't share the same entity.
Conclusion -
The Sole Proprietor and Its Business have the same entity ( identity). Due to which; at the time of crisis or loss it becomes the responsibility of the sole proprietor to pay off all the liabilities. Hence; Sole Proprietor has unlimited liability.
The joint-stock company and its business have different entity from his owner. that, limit off the liability for the company. Hence, the joint-stock company has limited liabilities to be paid off.