Question

Hector has decided that he wants to open a business in which he sells garden and landscaping plants and provides classes on how to care for flowers and vegetables. Which form of business organization will Hector most likely choose when he initially opens his business?

Answer 1

Answer: Sole Proprietorship

Explanation: This is a form of a business organisation in which one person owns and controls the organisation. Also known as a sole trader, this is not a legal entity. There is no legal separation between the owner and the business itself. The person owns the business and is responsible for the debts incurred in the business. However this also means that the sole trader receives all the profits generated from the organisation.

Hector is thus the sole trader in this question. He will be personally liable for any debts incurred in the business, but he will also solely reap the benefits of the business, such as the profits earned. He can run the business under his own name, or create a fake name. But this will not separate his organisation from him.