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 corporationc. Limited liability companyd. Limited partnership

Answer 1

Answer: Limited liability company

Explanation:

In such a structure the owners and the firm are considered separate. The owners in a LLC could not be held personally liable for the debts and liabilities of their company.

The companies have the limited liability feature of the corporations while the profit distribution method depicts partnership structure.

In the given case, Toby and Keith wants to distribute profit among them and also do not want to raise any outside capital. Also they want limited liability in their organisation.

Hence a Limited liability company is an appropriate choice for them.