Which ONE of the following is a reason why a sole trader would become a private limited company?
Select ONE answer:
- The business will have unlimited liability
- The business can keep financial records confidential
- Shareholders are liable for all debts
- Increased ability to raise finance
Show the workings to arrive at your answer, and explain and justify your reasons:
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This multiple choice question is suitable for Business Studies KS4 & KS3 classes
The answer is 4:
- The business will have unlimited liability – is not correct because the Ltd company does have limited liability.
- Can keep financial records confidential – is not correct because the Ltd company has to publish accounts.
- Shareholders are liable for all debts – is not correct because shareholders are only liable for the amount they invest.
- Increased ability to raise finance – is correct because the Ltd company can sell shares to raise finance.
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