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 _____,

Answer 1

Answer:

limited liability partnership

Explanation:

From the question, we are informed about Carla and John who 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 this case, under context of the legal forms of business, Carla and John have formed a limited liability partnership. limited liability partnership can be regarded as flexible legal as well as tax entity which give room for

partners to benefit from economies of scale through their working together as with this there would be reduction in their liability for the actions of other partners. As regards any legal entity, the law of

should be checked before one get too excited.

.