Sue has a great idea for a business but has limited financial assets. She wants to retain control over the management of the company, but she needs someone to provide additional financing. Her friend Tom has some money to invest and likes Sue's idea. He would like to share in any profits, but he doesn't have the time for or interest in managing the company and is nervous about the liability involved in running a business. What type of ownership structure would best suit both Sue and Tom?

Question

Quizplus · Accepted Answer

A limited partnership would be the best choice for Sue and Tom. Sue can be the general partner with control over management, while Tom can be the limited partner who provides additional financing but has no role in management and is not personally liable for the company's debts. This allows both parties to fulfill their desired roles and protects Tom from excessive liability.

Sue Has a Great Idea for a Business but Has