I think this type of business is an LLC or partnership but I am not 100% sure what kind of business is formed with just investors. A year ago, Chris joined with other investors to open a restaurant, Honest Ozzie'sDelicatessen. The deli is now failing, and one supplier is suing for overdue bills.1. Absent a formal agreement to the contrary, what form of businessorganization did Chris form with the other investors? What is his liabilityrisk? What are the tax consequences?2. What form of business organization would have been the best choice forHonest Ozzie's Delicatessen? Why?3. Based on your answer to 2., what are the management options for this formof business organization?

A partnership is a business organization in which two or more people share ownership and operate the…

Answered: A year ago, Chris joined with other…

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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I think this type of business is an LLC or partnership but I am not 100% sure what kind of business is formed with just investors.

A year ago, Chris joined with other investors to open a restaurant, Honest Ozzie's
Delicatessen. The deli is now failing, and one supplier is suing for overdue bills.
1. Absent a formal agreement to the contrary, what form of business
organization did Chris form with the other investors? What is his liability
risk? What are the tax consequences?
2. What form of business organization would have been the best choice for
Honest Ozzie's Delicatessen? Why?
3. Based on your answer to 2., what are the management options for this form
of business organization?

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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