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Purple Consulting has five consultants in the firm. The company’s annual revenue is around $500,000. Income is distributed among all consultants, and each is personally liable for claims if the company goes under.What type of business is this?

User WiatroBosy
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Answer:

The answer is: General partnership

Step-by-step explanation:

This type of company is created by two or more people that associate in a partnership to carry on a business. An agreement is made between partners (can be written or verbal) to set up the rules on how the partnership will operate. Usually partnership is terminable at will or at death or anyone involved. Their interests or assets can´t be sold without consent of the other partners.

Partnerships are usually considered to be private entities by their own (separate from the partners), so they can own property or sue someone else. They don´t provide liability protection to the partners, so each partner is liable for all debts of the partnership.

In the US, partnerships report their income to the IRS but are not taxed. Instead, individual partners are taxed based on their share of the profits or losses the partnership reported.

User Luiz Carvalho
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