Three advertising executives have decided to start their own business. They will each invest the same amount to get the business started and plan to split profits evenly among themselves. They want limited liability and to avoid double taxation. Which type of business ownership would best suit their needs?
A) sole proprietorship
B) LLP
C) partnership
D) corporation

Question

Quizplus · Accepted Answer

The best choice would be to form a limited liability partnership (LLP). This would allow the advertising executives limited liability, meaning that their personal assets would be protected in case the business were to run into financial trouble or legal issues. Furthermore, a LLP can avoid double taxation because they are taxed as a partnership and not as a separate entity like a corporation. Lastly, splitting profits evenly is a common practice in partnerships.

Three Advertising Executives Have Decided to Start Their Own Business