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.