Question

Brianna is establishing her own freight brokerage. She has two partners who will invest money in the business, but they won't manage it with her. What's the correct name for this type of business?

1) Sole proprietorship
2) Partnership
3) Corporation
4) Limited liability company

Answer 1

Brianna is establishing a Limited Liability Company (LLC) where she manages the business and her partners provide investment without management involvement. This offers liability protection and allows for profits to be taxed personally to the investors, avoiding corporate taxation levels.

Step-by-step explanation:

The correct name for the type of business that Brianna is establishing, where she will manage the company but her partners will only invest money, is called a Limited Liability Company (LLC). An LLC provides the liability protection of a corporation but allows for the tax benefits and flexibility of partnerships. This structure allows members to benefit from profits and avoids the liabilities that come with the debts and actions of the company.

Sole proprietorships are businesses owned by one person and there is no separation between the owner and the business entity, leading to unlimited liability for the owner. A partnership involves two or more people who share management and profits, but also share personal liability for the business. Corporations are more complex structures where the business is a separate legal entity, protecting owners' personal assets from business liabilities, but they also involve more regulation and taxation.