Which business structure would terminate at the death of a key person?

Which business structure would terminate at the death of a key person?

• A. Sole Proprietorship
• B. Cooperative
• C. General Partnership
• D. C Corporation

Answer: (A)

The key idea is how continuity is built into a business by its legal structure. In a sole proprietorship, the business and the owner are essentially the same legal entity. There’s no separate personality for the business itself, so when the owner dies there’s no automatic way for the business to keep operating. It typically ends unless there’s a plan to sell or transfer assets and reestablish the business under a new structure. Cooperatives and C corporations have their own separate legal personalities, so they can survive the loss of a member or leader—their existence isn’t tied to one person. A general partnership can continue only if the partnership agreement provides for it; otherwise, it commonly dissolves when a partner dies.

The key idea is how continuity is built into a business by its legal structure. In a sole proprietorship, the business and the owner are essentially the same legal entity. There’s no separate personality for the business itself, so when the owner dies there’s no automatic way for the business to keep operating. It typically ends unless there’s a plan to sell or transfer assets and reestablish the business under a new structure.

Cooperatives and C corporations have their own separate legal personalities, so they can survive the loss of a member or leader—their existence isn’t tied to one person. A general partnership can continue only if the partnership agreement provides for it; otherwise, it commonly dissolves when a partner dies.