Miguel and Ricardo have partnered in running a one-shop auto repair bu

QUESTION

Miguel and Ricardo have partnered in running a one-shop auto repair business for several years. Lately they have had to turn away many customers for lack of time, mechanics, and space to work on so many cars.

They want to open another shop, and think it is time to incorporate. A limited liability company is the best choice for them.
Indicate whether the statement is true or false.

ANSWER

Answer: TRUE
Explanation: A limited liability company is best because it would combine the tax benefits of a partnership—one level of tax—with the limited liability of a corporation. It works best for a company with few players. It is also free of many of the legal requirements that govern corporations, including annual reports, director meetings, and shareholder requirements.