Question

Carla and John enter into a partnership and form a business. Under the partnership agreement, Carla is directly responsible for the management of the firm and its liabilities. John has a minor financial stake in the firm and works there, but he is not held responsible for the taxes and debts owed by the firm. In the context of the legal forms of business, Carla and John have formed a_________ a. Limited liability partnership b. Sole proprietorship c. General partnership d. Subchapter C Corporation

Answer 1

In the context of the legal forms of business, Carla and John have formed a Limited liability partnership.

A) Limited liability partnership

Explanation:

Under limited liability partnership unlike the Partnership deeds the partners do not have to bear the unlimited liability. In limited liability partnership, the deed shows the bearable limits of the partner who will be held liable and hence, Carla and John enter into a partnership and is directly responsible for the management of the firm its liability.

Whereas, John has limited liabilities in the company. Therefore, it can be said that the partners are in a limited liability partnership.