Compare general, limited, and limited liability partnerships. Formulate reasons as to why a group of prospective partners might choose each.(4 points)
Heyo, could you please please post the answers for units 3,4,5, and 6 only the MC will be enough.
General Partnership:
A general partnership is a type of business entity where two or more individuals come together to form a business and share its profits, liabilities, and management responsibilities. In a general partnership, each partner has unlimited personal liability for the obligations of the business.
Reasons a group of prospective partners might choose a general partnership:
1. Shared Management: In a general partnership, each partner has an equal say in the decision-making process and management of the business. This can be beneficial for a group of prospective partners who want to have an equal and democratic partnership structure.
2. Simple and Affordable: Forming a general partnership is relatively simple and cost-effective compared to other business structures. It requires minimal legal formalities and paperwork, making it a favorable choice for small businesses with limited resources.
Limited Partnership:
A limited partnership is a business structure that consists of at least one general partner and one or more limited partners. The general partner has unlimited personal liability for the business's obligations, while the limited partners have limited liability and no involvement in the management of the business.
Reasons a group of prospective partners might choose a limited partnership:
1. Limited Liability: Limited partners in a limited partnership have their liability restricted to their investment in the partnership. This means that their personal assets are protected in case of business debts or legal claims. Limited liability is an attractive feature for individuals who want to invest in a business without being personally responsible for its obligations.
2. Investment Opportunities: Limited partnerships often attract investors who want to contribute capital to a business without taking an active role in its management. This structure allows entrepreneurs to secure funding from passive investors who are solely interested in financial returns rather than the daily operations of the business.
Limited Liability Partnership (LLP):
A limited liability partnership is a hybrid business structure that combines features of both partnerships and corporations. It offers limited liability protection to all partners, meaning that they are not personally liable for the debts and obligations of the partnership.
Reasons a group of prospective partners might choose a limited liability partnership:
1. Limited Liability: Similar to a limited partnership, a limited liability partnership offers personal asset protection to all partners. This feature is particularly appealing to professionals such as lawyers, accountants, or doctors who want to work collaboratively while safeguarding their personal assets from potential liabilities.
2. Professional Collaboration: LLPs are often formed by professionals who wish to work together and share resources, expertise, and client bases without taking on unnecessary personal liability. It allows professionals in the same field to pool their skills and resources together, maximizing collaboration and profit-sharing opportunities.