Questions: Jonathan is a patent attorney and is starting a legal practice. What form of business organization limits his liability to the amount he has invested in the business? A. Partnership B. Corporation C. Proprietorship D. None of the above

Jonathan is a patent attorney and is starting a legal practice. What form of business organization limits his liability to the amount he has invested in the business? A. Partnership B. Corporation C. Proprietorship D. None of the above
Transcript text: Jonathan is a patent attorney and is starting a legal practice. What form of business organization limits his liability to the amount he has invested in the business? A. Partnership B. Corporation C. Proprietorship D. None of the above
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Solution

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Answer

The answer is B. Corporation

Explanation
Option A: Partnership

In a partnership, partners typically have unlimited liability, meaning they are personally liable for the debts and obligations of the business. This does not limit liability to the amount invested.

Option B: Corporation

A corporation is a legal entity that is separate from its owners. Shareholders in a corporation have limited liability, meaning they are only liable for the debts of the corporation up to the amount they have invested. This structure protects personal assets beyond the investment in the corporation.

Option C: Proprietorship

A sole proprietorship does not provide limited liability. The owner is personally responsible for all debts and obligations of the business, which means personal assets can be at risk.

Option D: None of the above

This option is incorrect because a corporation does indeed limit liability to the amount invested, making it the correct choice.

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