$4.$ Forms of business organizations

Businesses can be classified into the following forms: sole proprietorship, partnership, corporation, limited liability company $($LLC$),$ and limited liability partnership $($LLP$).$

Different forms of businesses have different characteristics. Which of the following characteristics would apply to a partnership? Check all that apply.

Legal arrangement between two or more people

Can easily raise large amounts of capital

Subject to unlimited personal liability

Taxed at individual level

Chartered by a state and is its own legal entity separate and distinct from its owners and managers

Income is allocated on a pro rata basis

You come across different kinds of businesses every day. The following table describes some businesses. Using the description of each business, classify it as a sole proprietorship, a partnership, a corporation, or a limited liability company$/$limited liability partnership.

Business Scenario

Type of Business

Andrew founded and operated a wedding planning agency, which specialized in celebrity weddings. When he died, his business was dissolved because there was no plan for control after his death.

Purple Consulting has five consultants in the firm. The company$$s annual revenue is around $$500,000.$ Income is distributed among all consultants, and each is personally liable for claims if the company goes under.

DDX Co$.$ is a shipping company. Caesar owned $1,000$ shares of DDX stock. He found better opportunities and sold his entire stake in DDX to another investor.

Caesar, Rafael, and Jose own an accounting firm in San Francisco. All share in the profits of the firm proportionately and file taxes at an individual level. According to their agreement, none of the owners will be held personally liable for the accounting firm$$s debt.