Three friends, Louise, Marcia, and Rebecca are interested in going into business
ID: 2737825 • Letter: T
Question
Three friends, Louise, Marcia, and Rebecca are interested in going into business together. Louise will contribute her full efforts on a daily basis but has limited funds to invest in the business. Marcia will fund the venture but wants to limit her liability to her initial investment and has no interest in the daily operations. Rebecca will be involved as an active consultant and manager and will also contribute funds. Louise and Rebecca are willing to accept liability for the firm's debts as they feel they have nothing to lose by doing so. All three individuals will share in the firm's profits and wish to keep the initial organizational costs of the business to a minimum. Based on this information, what form of business entity seems most appropriate for Louise, Marcia and Rebecca?
sole proprietorship
joint stock company
limited partnership
general partnership
corporation
sole proprietorship
joint stock company
limited partnership
general partnership
corporation
Explanation / Answer
''Limited Pertnership'' seems appropriate as Louise and Rebecca are ready to invest in the business but only have a limited funds. And Louis will contribute her full efforts on a daily basis so she will be a working partner and will be entitled to salary. All three individuals will share in the firm's profits based on their investments.