Question

Rejena and Carlos met in college and soon learned they were a success as study partners, but they enjoy totally different lifestyles. They both wanted to own and operate their own old-fashioned family drugstore, a small business with the basic health aids, a pharmacy, and an old-fashioned soda shop. Rejena inherited an old building in a rapidly revitalizing and growing urban tourist area. Carlos has a large maturing trust fund. They believe they can pool their resources and capture this opportunity to open their store. After studying the legal formations for businesses, what would be the best type for Rejena and Carlos? Explain and defend your choice.

Answer 1

The best type of legal formation of the businees they can do is Limited Liability Partnership or LLP. The market they are try to enter has changes after all the big players coming in to same market and providing almost the same services at a very cheaper price that why to protect both Rejena and Carlos from any potential losses that they may face that why partnership is not an option becuase the personal assets of the partners are not protected in that and many times suupliers are concerned to do businesses with a partnership.

As comapered to company formatiom the legal compliances for LLP are far less that why partner can mainly focus on the business and not worrying about compliance are complied with. The preliminary cost for forming a company is far more that compared to that of a LLP.

In LLP they get both the good features of a Partnership as well as of company. The Liability of they partner is limited and for paying of dedbts personal assets of the partners cannot be used only the assest that are registered in the LLP name can be used and only 2 partners are required for formation of LLP and you can add as many partners you want there is no limitation on number of partners. All the compliance can be cmplied by one designated partner in LLP compared minimum two are required for the most part in the comoany.

Therefore LLP gives Partners the protection of a company as well as the flexibility of the partnership concern. Therefore Rejena and Carlos should form a LLP.