Question

Mary and her sister Amanda want to go into business together selling beauty products. They have agreed to share the risks and profits associated with their new business endeavor, what type of business ownership should they set up?

Answer 1

Answer: partnership.

Explanation: Mary and her sister Amanda have agreed to share the risks and profits associated with their new business, when two people agree to start a new business venture this is known as partnership. The risks are shared, so are profit and losses.

However they have unlimited liability and this is the major drawback to such kind of business ownership. They may also disagree on some of the most important issues of the business.

Answer 2

Answer: Mary and her sister Amanda should form a partnership.

A partnership is a type of business structure where two or more people come together to manage and share the profits of a business.

The parties to a partnership are called partners. They form an agreement about their contributions and shares of profits with mutual consent and amongst themselves.

Since the partners take a share of profit in the business, they are jointly and personally liable for the debts incurred by a partnership.