Question

You are forming a new company that delivers food to residents across college campuses. you have a number of partners, but your primary goals are to avoid personal liability and double taxation. you want to pay each of the partners based on their contribution to the success of the company, which is not equal to their percentage ownership. you could accomplish this by forming a(n):

a. ownership.
b. partnership
c. S corporation.

Answer 1

To pay partners based on their contribution to the success of the company, which is not equal to their percentage ownership, and avoid personal liability and double taxation, you should form a partnership.

Step-by-step explanation:

If you want to pay each partner based on their contribution to the success of the company, which is not equal to their percentage ownership, you should form a partnership.

In a partnership, you can have different distributions of profits among partners based on agreed-upon terms. This allows you to reward partners based on their individual contributions rather than solely on their ownership percentage. By forming a partnership, you can also avoid personal liability and double taxation. For example, if Partner A contributed more capital and effort to the company's success, you can have a partnership agreement that specifies a higher share of profits for Partner A, even if their ownership percentage is lower than Partner B's.