Question:
Mr. and Mrs. Carter are the owners of Village Green pre-school. Mr. Carter is identified as the sole proprietor on all business documents. Both parties make decisions relating to the business; for example, Mr. Carter recently bought new playground equipment, and Mrs. Carter hired two new teachers. Is the following statement regarding nature of this business true or false? Although the parties may believe the business is a sole proprietorship, it is actually highly likely that this enterprise is a general partnership. In this case, both parties are making critical business decisions. For example, hiring teachers is critical to the business; thus, Mrs. Carter is not acting merely as an employee of the sole proprietorship but is sharing decision-making with Mr. Carter; shared decision-making is a hallmark of general partnerships. In this case, both will have unlimited personal liability for any business decisions.