You are planning two business ventures. The first venture is a business that will own self-service businesses, such as laundromats, car washes, and warehouse storage. Due to start-up costs and accelerated write-offs of expenses and assets, you expect the business to generate losses in the first year or two, after which it should earn a yearly return on equity of about 20%. You prefer to own the business entirely yourself, yet you want to hire someone with experience in the business to do most of the day-to-day operations of the business. While you prefer that the person not be an owner of the business, you may be willing to grant a small amount of ownership or a share of the profits to him or her.

The other business venture will purchase and develop 320 acres of land on the outskirts of your city. You plan to construct several commercial buildings on the site and to lease the building space to several tenants. The venture will generate losses during the first 4 or 5 years of construction prior to full occupancy of the buildings. You want the business to be owned by members of your family. You want to be the only manager of the business; other family members will be passive owners only. You hope that this business will generate enough income to provide a moderate level of income to every member of your family for many years.

For each of the two business ventures, discuss whether the best business form for each would be a limited liability company or a limited partnership. In your answers, explain the reasons for your choice (i.e., why that business form would be the best choice for that particular venture).