Ming's catering company is structured as a sole proprietorship. The business has grown and he is hiring more employees and getting high-profile jobs
Ming is worried about the personal impact of potential lawsuits such as an employee getting burned or a refrigerator failing before a huge party. What would you advise Ming to do?
What will be an ideal response?
Answer: Sample response: He should consider changing the company from a sole proprietorship to a corporation. In a corporation, Ming would have limited personal liability from lawsuits. People could sue and demand assets from the company, but they could not demand assets from the owner personally. Another option might be to form an S corporation, which has limited liability for company debts, or an LLC of some type, which also limits liability.
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