List the three principle forms of business ownership in construction and also state the liability limits in each case.
Explanation of Solution
The three principle forms of business ownership in construction are as follows:
- 1. Proprietorship
- 2. Partnership
- 3. Cooperation
In the case of proprietorship and partnership, the owner is responsible for each and every debt incurred in the business. Hence, the personal asset of the owner is at risk to cover the debt incurred in the business.
In the case of cooperation, the business is owned by a number of people who has stock of the cooperation. In the case of debt, the share value of the stock possessed by the individual is at risk. For example, if a person has 50 shares of stock from the cooperation, each having a value of 200 dollars, then in the case of debt, the person will be legally responsible for 10,000 dollars as a stock owner in the cooperation.