Question

Kent and Craig, who want to start a horse-training business, spoke to an insurance agent about getting insurance to cover potential liabilities, but were told that they could not get liability insurance because of the high risk nature their proposed business. What business entities would you recommend to Kent and Craig? Why?

Dave and Cindy, who want to start a law firm, each have $1,000 to invest in the business and no personal assets and want limited liability protection and only 1 level of taxation.They want your advice on whether they should form their law firm as: 1) a general partnership; or 2) a limited liability company (LLC). What business entity would you recommend? Why?

Answer 1

Solution: the answer in delivered in 2 stages because of the character of dualistic problems:-

Part (1)

As Kent and Craig are concerned during a professional with prospective risk and that they wish to hide their prospective accountability. the character of the industry which can be utmost applicable in corporate against the other variety of industry like individual merchant or partnership company because of the subsequent details:-

Reason I: Unrestricted accountability- just in case of insolvency or industry letdown, Kent and Craig don't seem to be obligated to trade their particular resources.

Reason II: convenience of Business- because of the Supply of additional investment compared to restricted investment in sole profession and partnership company, they're ready to manage with the qualms related to the industry.

Part (2)

Wanting to the purposes of Dave and Cindy, the indebtedness corporation is desirable because of the subsequent details:-

Reason I: No danger to non-public assets because the corporation is proscribed accountability.

Reason II: just one level of tax within the variety of company tax .