10 Questions
What is John's primary concern when setting up his business?
Raising funds for inventory
Why do George and Sam want to invest in John's business?
To make a profit as an investment
What is John willing to accept in his business?
Liability for the business's actions
Why is John not interested in registering his business with the government?
He doesn't want to deal with bureaucratic red tape
What type of business structure is most suitable for John, George, and Sam?
Limited partnership
What is the primary advantage of the business structure that George, Sam, and John are likely to choose?
It enables the separation of ownership and management responsibilities.
What is the primary role that George and Sam want to play in John's business?
Passive investors
Why is John's business unlikely to be a corporation?
It would require registration with the government.
What is the primary characteristic of John's business that influences his choice of business structure?
Its small size and simplicity
What is the relationship between John and his business?
John is the owner and operator of the business.
Study Notes
Business Structure Considerations
- John wants to start a small vintage clothing business with limited financial expectations.
- He doesn't want to register the business with the government and isn't concerned about liability.
Investment and Liability
- George and Sam are willing to invest in John's business for a financial return.
- They want no responsibility or liability in the business.
Business Partners' Roles
- John wants to run the business and accept the associated liability.
- George and Sam want to be investors with no responsibility or liability.
Possible Business Structures
- Contemplated options include limited partnership, corporation, sole proprietorship, general partnership, and limited liability partnership.
Business Structure Considerations
- John wants to start a small business selling vintage clothing with limited financial returns.
- He doesn't want to register the business with the government, opting for minimal liability.
- John needs funding for inventory and is considering investment from friends George and Sam.
Investment Expectations
- George and Sam want to invest in the business for financial returns, but without responsibility or liability.
- John is willing to accept liability in exchange for control over the business operations.
Business Structure Options
- The situation suggests that John, George, and Sam are considering a business structure that balances liability and control, such as a sole proprietorship or limited partnership.
John wants to start a small vintage clothing business with the help of his friends George and Sam as investors. He wants to keep the business simple and avoid government registration.
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