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Tim and Sarah decide to start a new technology company together. They raise capital by selling shares of stock to investors and appoint a board of directors to watch over the company's operations. Which form of business ownership are Tim and Sarah operating under?


ANonprofit organization
BLimited liability company
CPartnership
DSole proprietorship

Verified Answer :

Final answer:

Tim and Sarah are operating their technology company as a corporation. They raise capital by selling shares and have a board of directors, which are key characteristics of a corporate structure. Other business forms, like sole proprietorships and partnerships, do not encompass these features.


Explanation:

Identifying the Form of Business Ownership

Tim and Sarah's technology company involves raising capital by selling shares of stock to investors and appointing a board of directors to oversee operations. This structure indicates that they are operating as a corporation.

The key features of a corporation include:

  • Limited liability: Shareholders are not personally responsible for the company's debts; they can only lose the amount they invested.
  • Ability to raise capital: Corporations can sell shares to raise funds for operations and growth.
  • Separate legal entity: A corporation is distinct from its owners, enabling it to enter contracts, sue, and be sued in its own name.

In contrast, the other options do not meet the criteria outlined:

  1. Nonprofit organization: Focuses on a charitable mission rather than profit.
  2. Limited liability company (LLC): Offers limited liability but typically does not issue shares.
  3. Partnership: Involves two or more individuals sharing ownership without a board of directors.
  4. Sole proprietorship: Owned by a single individual with full personal liability.

In conclusion, Tim and Sarah's company structure aligns with that of a corporation due to the sale of shares and the presence of a board of directors.


Learn more about business ownership here:

https://brainly.com/question/50881574


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