Question

Ben and James have been operating their advertising business as a partnership for the last three years. Business has been fairly good ever since they commenced. But now, with the recent trade war between China and the United States, the future of the advertising industry, as with just about all industries, looks dim. Concerned that a downturn in the economy could affect their business and render them personally liable for any losses sustained, Ben and James are contemplating on converting their partnership into a business entity that would shield them from any personal liability against such debts. However, both insist on running the business together, and with as little formalities as possible.

Required: Advise Ben and James on the type of business entity that would best suit their needs.

Answer 1

The type of organisation I would like to suggest to both Ben and James to open such an organisation where they have a limited risk for the liability and also could run the business together can open a Limited Liability Partnership or LLP.

A limited liability partnership is a partnership where all or some partners have the limited liability shared. Elements of both the partnership and corporation is shared kn this. One partner is not responsible or liable for another partner's misconduct or the negligence. They cannot be forced to pay a business debt with the perisnal property and assets. Another advantage is that this type of LLP formation could be easily formed without any formalities. Thus, this is the most suitbale organisation form for Ben and James.