Question

Tina and her best friend Aaliyah want to start a medical transcriptionist company together. They grew up together and know each other well, but when it comes to business, neither of them want to be held responsible for any negligence or misconduct of the other should something happen. They also want to be certain to only be taxed once on company profits. Which type of organizational structure would be best for Tina and Aaliyah to establish?

Answer 1

Answer:

Limited liability partnership (LLP) or a limited liability company (LLC)

Explanation:

Both the LLP and LLC provide limited liability to the owners and they are both pass through tax entities. That means that they are not directly taxed, instead their owners are taxed.

Depending on where Tina and Aaliyah live, they might not be able to open a LLP, and instead they will need to start a LLC. Any of them will satisfy their needs, but starting a LLC is a little bit more complicated and can cost more money. An LLC is usually better if there are several partners, but in this case if they can avoid the cost of opening a LLC it would be better for them.