Which of the following is an important factor to consider when selecting a type of business ownership?

• A. The owner's favorite management style
• B. The color scheme of the company's logo
• C. The number of employees in competing businesses
• D. The level of personal liability the owner is willing to assume

Answer: (D)

Verified step by step guidance

1. Understand the concept of business ownership: Business ownership refers to the legal structure of a business, which determines how the business is operated, taxed, and how liabilities are handled.
2. Identify the key factors in selecting a business ownership type: These include personal liability, taxation, management control, ability to raise capital, and ease of formation.
3. Focus on personal liability: Personal liability refers to the extent to which the owner is personally responsible for the debts and obligations of the business. This is a critical factor because it impacts the owner's financial risk.
4. Compare different types of business ownership: For example, sole proprietorships have unlimited personal liability, partnerships share liability among partners, and corporations limit liability to the amount invested in the business.
5. Evaluate the owner's willingness to assume liability: The decision should align with the owner's risk tolerance and financial situation, as this will influence the choice of business structure (e.g., sole proprietorship, partnership, corporation, or LLC).