Jeremy is thinking of starting up a small business selling NASCAR memorabilia. He asks his friend, Carmen, if she'd like to join him in setting up a partnership to start the business. What is one disadvantage in joining the partnership that Carmen should consider? (A) Carmen should realize that profits in the partnership will be reduced by dividend payments to shareholders. B) Carmen should realize that, as an owner of the business, she will be personally responsible for the debts of the business. Carmen should realize that the profits of the business will also be taxed as dividend income, so she faces the potential for double taxation of that business income. D Carmen should realize that the Jeremy will have complete control over the business because it was his idea. C
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- Leon’s restaurant business suffers from a lack of capital. He is currently the sole owner of the business and is thinking about taking on two partners. He has approached several investors who have told him that they will only invest if they have limited liability. 1) Why would it be advisable for Leon to draft up a Partnership Deed prior to entering into the business arrangement with any new investors? 2) What would be the outcome if there is no Partnership Deed? 3)In a situation in which a Partnership Deed exists and a dispute arises, which would take precedence, the Partnership Deed or the Partnership Act? 4)Who are considered silent or sleeping partners?Sebastian, Wyatt, and Mathew are close friends who graduated with master's degrees in accounting from an Ivy League institution. Instead of seeking employment, the friends decided to create their own accounting business. At their initial meeting, the friends could not decide whether to form a partnership or a limited liability company. You were approached as a company law student for advice on the type of business that would be appropriate for the friends. (a) What kind of business would you suggest to the friends? Justify your recommendation. Your reasoning should not be more than 500 words and should cover the following points: the requirement for the registration of the business in Jamaica, the advantages and disadvantages of the business type and information on the dissolution of the business. (b) Assume the friends opted to create a partnership, and has asked for your assistance in creating a Partnership deed; create a partnership deed that…Sebastian, Wyatt, and Mathew are close friends who graduated with master's degrees in accounting from an Ivy League institution. Instead of seeking employment, the friends decided to create their own accounting business. At their initial meeting, the friends could not decide whether to fom a partnership or a limited liability company. You were approached as a company law student for advice on the type of business that would be appropriate for the friends. What kind of business would you suggest to the friends? Justify your recommendation. Your reasoning should not be more than 500 words and should cover the following points: i. The requirement for the registration of the business in Jamaica ii. The advantages and disadvantages of the business type iii. Information on the dissolution of the business. Assume the friends opted to create a partnership, and has asked for your assistance in creating a Partnership deed; create a partnership deed that includes at least six terms that the…
- Natalie’s friend Curtis Lesperance decides to meet with Natalie after hearing that her discussions about a possible business partnership with her friend Katy Peterson have failed. Natalie had decided that forming a partnership with Katy, a high school friend, would hurt their friendship. Natalie had also concluded that she and Katy were not compatible to operate a business venture together. Because Natalie has been so successful with Cookie Creations and Curtis has been just as successful with his coffee shop, they both conclude that they could benefit from each other’s business expertise. Curtis and Natalie next evaluate the different types of business organization. Because of the advantage of limited personal liability, they decide to form a corporation. Curtis has operated his coffee shop for 2 years. He buys coffee, muffins, and cookies from a local supplier. Natalie’s business consists of giving cookie-making classes and selling fine European mixers. The plan is for Natalie to use…which type of organization should be formed. Rob and Bran want to form a snow removal business. They are deciding between a general partnership and a limited liability company. Bran says it is important that the two have limited liability and do not pay corporate income taxes.Bob, Frank, and Frances are equal partners in a closely held business. Although the partners work well together, their spouses and children do not. No partner is ready to quit the business and/or retire, but they are each worried about how the business would operate if one of the partners left the business due to death or disability. Each partner is financially overextended and thus does not enjoy good cash flow currently. Which one of the following is the most appropriate business transfer technique for the partners to use considering these circumstances? A) A preferred stock recapitalization of the business B) A private annuity agreement among the partners C) A cross-purchase buy-sell agreement among the partners D) An entity buy-sell agreement between the business and each partner
- Mr. Ahmed, the general partner of a big furniture store in Muscat is going to contribute a bigger share of money to settle the partnership's liabilities to its creditors. Why Ahmed is going to do so? O General partners have a distinct legal personality O General partners have unlimited liability O None of the choices are correct O General partners will contribute more because they have more moneyA plastic surgeon wants to start a new private clinic. Because of the possible malpractice involved, this doctor is concerned about losing his personal wealth as a result of a lawsuit against his business. If he will be the major owner of the business, how should he set up the organization? Multiple Choice O A sole proprietorship A limited liability corporation A limited liability partnershipBailey's dream is to open a chain of salons. She hopes to attract investors to help finance growth. Having once considered forming a C corporation, Bailey wants to have more flexibility about how the new business will be taxed. She also wants to offer investors/owners limited liability. Bailey can satisfy her objectives by setting up a(n) Multiple Choice general partnership. alien corporation. S corporation. limited liability company.
- If your friend asks you to invest into his two year old restaurant as a partner, which is expanding and needs money to open a second restaurant in another location, will you agree? What factors will you consider in making the decision? Will your answer be different if he asks you to personally loan him the money that he will in turn invest into the business? Why or why not?I am only interested in parts b, c & dNatalie’s friend Curtis Lesperance decides to meet with Natalie after hearing that her discussions about a possible business partnership with her friend Katy Peterson have failed. Natalie had decided that forming a partnership with Katy, a high school friend, would hurt their friendship. Natalie had also concluded that she and Katy were not compatible to operate a business venture together. Because Natalie has been so successful with Cookie Creations and Curtis has been just as successful with his coffee shop, they both conclude that they could benefit from each other’s business expertise. Curtis and Natalie next evaluate the different types of business organization. Because of the advantage of limited personal liability, they decide to form a corporation. Curtis has operated his coffee shop for 2 years. He buys coffee, muffins, and cookies from a local supplier. Natalie’s business consists of giving cookie-making classes and selling fine…Moustapha and Ava want to form a business to buy and sell small appliances. They will both actively work in the business. They are concerned about personal liability. They estimate the company will not be profitable for five years and they want to be able to deduct any losses. Which form of entity should they use to accomplish their objectives? O limited partnership O any of the listed entities would accomplish their objectives O limited liability company O general partnership