Maria Martinez and her sister, Christina, are planning to operate a small day care center in a remodeled building. They've obtai
ned a license, and have enough staff to handle up to 24 children. Christina doesn't plan to work at the center and hasn't incurred as many debts or responsibilities as Maria. Maria originally invested $24,000 in the business, and Christina invested $8,000. Maria wants to keep their taxes low, and she also wants to keep Christina's liability to the amount of her original investment. Which type of business arrangement would be best for them?
If these were the given choices: A. Corporation <span>B. General partnership </span> <span>C. Limited partnership </span> <span>D. Sole proprietorship </span> The correct answer is C. LIMITED PARTNERSHIP.
Limited partnership is defined as a partnership consisting of a general partner and a limited partner. In the above scenario, Maria will be the general partner while Christina is the limited partner.
Maria, as the general partner, will be the one who manages the business and has the unlimited liability for the debts and obligations of the business.
Christina, as the limited partner, will only be liable to debts and obligations up to her invested amount and she can't participate in managing the business.
