Jeremy Is Thinking of Starting Up a Small Business Selling

question 204

Multiple Choice

Jeremy is thinking of starting up a small business selling NASCAR memorabilia.He asks his friend, Carmen, if she'd like to join him in setting up a partnership to start the business.What is one disadvantage in joining the partnership that Carmen should consider?

• A)Carmen should realize that profits in the partnership will be reduced by dividend payments to shareholders.
• B)Carmen should realize that, as an owner of the business, she will be personally responsible for the debts of the business.
• C)Carmen should realize that the profits of the business will also be taxed as dividend income, so she faces the potential for double taxation of that business income.
• D)Carmen should realize that the Jeremy will have complete control over the business because it was his idea.

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Definitions:

Disputed Account

A financial account or transaction that is contested or challenged due to disagreements between the parties involved over its accuracy or legitimacy.

Financial Calculators

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Interest Rate

The tariff a borrower pays to a lender, calculated as a proportion of the principal, for the right to employ certain assets.

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Calculated by discounting future cash flows to understand their worth in today's terms, taking into account the time value of money.