Question

Fern and Grover wish to combine their professional accountancy practices into a single firm that combines the pass-through tax status and other advantages of a partnership with limits to the personal liability of the partners. The appropriate business organization for this enterprise is most likely:______.
a. a family limited liability partnership.b. a limited liability partnership.c. a limited liability company.d. a limited liability limited partnership.

Answer 1

Answer:

The correct option is b. a limited liability partnership.

Explanation:

Limited liability partnerships (LLPs) are a type of partnership in which each partner's liability is limited to the amount invested in the company.

Limited liability means that creditors cannot seize a partner's personal assets or income if the partnership fails.

Spreading risk, leveraging individual abilities and knowledge, and establishing a division of labor are all advantages of having business partners.

Some of the professional businesses in which LLPs are common include accounting firms, legal firms, and among others.

Therefore, the correct option is b. a limited liability partnership.