Question

Investors in an LLC or LLP have votes in proportion to their own interest. LLCs and LLPs have been gained in popularity, but large companies still find its advantages to be ____ corporations because of advantages in raising capital for growth.

a) S
b) C

Answer 1

LLCs and LLPs are popular for their limited liability and management flexibility, but large companies favor corporations for their ability to raise capital by selling stock or issuing bonds, as this provides a larger scope for growth without exposing shareholders to personal financial risk.

Step-by-step explanation:

Investors in an LLC or LLP have votes in proportion to their own interest. While LLCs and LLPs have been gaining in popularity due to their flexible management structures and limited liability, large companies still find their advantages to be inferior to corporations because of the latter's superior ability in raising capital for growth. This is primarily because shareholder liability in a corporation is limited to the amount they have invested, which encourages investment without the fear of personal financial ruin. Additionally, corporations find it easier to raise money as they can sell stock or issue bonds, tools that LLCs and LLPs do not readily have at their disposal.