Three friends Josh, Zandra and Malik are having a discussion about the types of business structures and the liability aspect of each type.
a. Zandra sees many advantages in forming a sole proprietorship. She thinks that the business is separate from the owner and therefore any debts belong solely to the business .Explain to Zandra the concept of unlimited liability and if she is correct that any debts that a sole proprietor accrues belong only to the business.
b. Josh thinks that being in a general partnership is better for him as he sees more advantages in having another person in the business. His understanding is that any profits of the partnership are always split evenly, explain if this is always the case. Also if a 3rd party sues the partnership ,he thinks that the liability of each partner will be spilt evenly and each partner will be liable only for their own share, explain if this is accurate .
c. Malik thinks that a limited partnership is the best type, as the partnership can have access to the funds invested by the limited partners. He thinks that every partner, whether a general or a limited partner, shares equally in the liability of all debts. Again explain if this is an accurate understanding d. Josh, Zandra and Malik are also wondering about forming a corporation. They are aware that there are more formalities and regulations involved but they would like to know what is the main advantage of forming a corporation ,explain this to them.

pur-new-sol

Related Questions