Three college graduates want to start an auto shop. Two of the partners will do most of the work, so they plan to share, receiving 40% of the profits each. The remaining partner will get 20% of the profits. Because working with other people's cars can create liabilities, they want to form of business that provides liability protection. Which form of business best fits their needs?
A) sole proprietorship
B) partnership
C) LLP
D) pass-through corporation

Question

Quizplus · Accepted Answer

A Limited Liability Partnership (LLP) provides liability protection for each partner while allowing for flexible profit sharing arrangements. This business form is often preferred by professionals, such as auto mechanics, who want to protect their personal assets from potential lawsuits.

Three College Graduates Want to Start an Auto Shop