Question

Toby and keith are planning to create and jointly own a company that will license their patented technology solely for royalties and will not create their own products for sale. earnings would be distributed to these two owners, rather than retained to grow the business with the view toward selling it or taking it public. these investors want limited liability and do not anticipate raising capital from any other investors. the most suitable form of entity is a:
a. c corporation.
b. s corporation
c. limited liability company
d. limited partnership

Answer 1

Answer:

D. Limited Partnership

Explanation:

Limited partnership is a form of business where two or more people create an entity and in which the liability of the partners are limited to their initial investment in the business. Limited partnership has benefits of operating a business with combined expertise of two or more people without facing the complex challenges  of operating a corporate corporation.

Since Toby and Keith want an a form of entity that is simple enough to operate a business without creating a product, distribute their earnings without retaining them and not having the intention of raising capital from any other investors, they should consider a limited partnership.

Limited partnership will be perfect  for their need to only share earnings, and not doing other things that a corporate corporation is known for.