Monica and Chandler are reviewing business structures for their new bagel bakery and have discovered they like some aspects from each of the business structures they have reviewed. Ideally, they would like to use a structure that combines elements from more than one business structure. Which business structure is a hybrid of two other structures? (1 point) Responses Sole proprietorship Sole proprietorship Limited liability company Limited liability company Partnership Partnership Corporation
Limited liability company
A Limited Liability Company (LLC) is a hybrid business structure that combines elements from both a partnership and a corporation. It provides the limited liability protection of a corporation while allowing for the flexible management and tax advantages of a partnership. Therefore, the answer is "Limited liability company."
The business structure that is a hybrid of two other structures is a Limited Liability Company (LLC).
To understand why an LLC is considered a hybrid structure, let's first briefly explain the other two structures mentioned: sole proprietorship and partnership.
1. Sole Proprietorship: In a sole proprietorship, a single individual owns and operates the business. The owner has complete control over decision-making and bears unlimited personal liability for the business's debts and obligations.
2. Partnership: A partnership is a business structure where two or more individuals agree to share ownership and responsibilities of the business. There are two common types of partnerships: general partnership and limited partnership. In a general partnership, all partners have unlimited personal liability for the business's obligations. In a limited partnership, there are general partners (with unlimited liability) and limited partners (with limited liability).
Now, let's come to the hybrid structure:
3. Limited Liability Company (LLC): An LLC combines characteristics of both corporations and partnerships. It provides limited liability protection for its owners, known as members, similar to a corporation. This means that the owners' personal assets are separate from the company's debts and obligations, protecting them from personal liability. However, unlike a corporation, an LLC has more flexibility in terms of management and taxation. It is typically not subject to the same formalities and regulations as a corporation, making it easier to establish and maintain.
Therefore, an LLC can be considered a hybrid structure because it combines the limited liability protection of corporations with the flexibility and simplicity of partnerships. Monica and Chandler might find an LLC appealing because it offers liability protection while allowing them to customize the management and taxation structure to their needs.