Question

You run a consulting firm. Today, my wife and I walk through your doors and hire you to help us put together a company. They keys (for us) is that we both want to run the company (management) and that we want to protect our personal assets in case the business fails/gets sued. In terms of long term, we hope one day we can grow the company and sell it. Please do the following 1. Name the two types of businesses that would be ideal to fit our needs (.5) and explain (.5) 2. Name the one type of business that cannot be chosen (.5) and explain why (.5) 3. Pick which type (from 1 above) you would recommend the most and explain the biggest negative given our circumstances as listed above (.5)

Answer 1

ANSWER 1

TYPE OF BUSINESS THAT WILL BE IDEAL FOR SITUATION

1-LIMITED LIABILITY COMPANY

EXPALNATION- IT IS FORM OF PRIVATE LIMITED COMPANY WHERE LIABILITY IS UPTO COMPANIES ASSET. NO PERSONAL ASSET INVOVELED IF ANY POINT COMPANY GETS BANKRUPT.

2-LIMITED LIABILITY PARTNERSHIP

EXPALNATION-IT IS ONE OF THE TYPE OF PARTNERSHIP .WHERE NO PERSONAL LIABILITY OF PARTNER INVOLVED.

ANSWER 2

TYPE OF BUSINESS THAT CANNOT BE CHOSEN

1-PROPRIETORSHIP FIRM

EXPALNATION-IT IS THAT TYPE OF BUSINESS IN WHICH IF A FIRM INCCUR LOSS THEN THEY ARE PERSONALLY LIABLE FOR THAT LOSS.

ANSWER 3

BEST TYPE OF WILL BE LIMITED LIABILITY COMPANY.

BIGGEST NEGATIVE CIRCUMSATANCE IS THAT THERE VISION IS TO SELL THE COMPANY. VISION STATEMENT SHOULD A HAVE A GOOD PURPOSE AND SELLING OF COMPANY WILL NOT BE CONSIDER AS GOOD VISION STATEMMENT.