Question

You and your neighbor Diane have agreed to be partners in CreatePlace Site Design, a website design business for small businesses, clubs, and community agencies. After reading the information below, indicate which are indicative of a general partnership and which are indicative of a limited partnership using the drop-down menu. You will also decide who will be a limited partner and who will be a general partner in your new business. Diane wants to invest $5,000 but she will not have an active role in the new business. You prefer to work directly with customers, make decisions, and to do the actual website design. You will be responsible for signing contracts on behalf of the new business. Diane will not be liable for any debts. Diane will not make business decisions and receive 30 percent of the profits. You will receive 50 percent of the profits plus a small monthly fee for management services. Diane’s name will not be mentioned in any promotional materials about the business.

Answer 1

Diane wants to invest $5,000 but she will not have an active role in the new business. (limited partnership) You prefer to work directly with customers, make decisions, and to do the actual website design. (limited partnership) You will be responsible for signing contracts on behalf of the new business.(limited partnership) Diane will not be liable for any debts.(limited partnership) Diane will not make business decisions and receive 30 percent of the profits. (limited partnership) You will receive 50 percent of the profits plus a small monthly fee for management services. (general partnership) Diane’s name will not be mentioned in any promotional materials about the business. (limited partnership)

Diane will be the limited partner while you will be the general partner.