Question

Aditi was born in Delhi and is a fashion Designer. She runs her high fashion garments business from the posh Greater Kailash market of Delhi. After running the business for five years Aditi feels that she should get her business registered in a way that she can save herself from the threat of unlimited liability. But at the same time, she doesn’t want anyone else to be a part of decision making or to interfere in her business. On the basis of the given information, answer the following questions:

a) State the form of business organization to be formed by Aditi to get it registered.
b) Enlist any two features of the form of business organization stated in part (a).

Answer 1

Aditi should register her fashion garments business as a Limited Liability Company (LLC) to protect her personal assets and maintain total control over the business decisions.

Step-by-step explanation:

Aditi should consider registering her business as a Limited Liability Company (LLC). This structure will provide her with limited liability, meaning her personal assets will not be at risk in case the business faces financial issues. However, it will also allow her to retain full control over the business decisions, as an LLC can have a single owner.

Features of an LLC:

• Personal asset protection: LLCs provide limited liability to their owners, which means that the owners are usually not personally responsible for the business's debts and liabilities.
• Management flexibility: An LLC can be managed by its members (owners), allowing for flexible management and operation structure. Aditi can manage her business as a single member without the need for board decisions or partner consultations.