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Sam, Tom, and Joe Want to Start a Small Business

question 3

Multiple Choice

Sam, Tom, and Joe want to start a small business. Joe will fund the venture but wants to limit his liability to his initial investment and has no interest in the daily operations. Sam will contribute his full efforts on a daily basis but has limited funds to invest in the business. Tom will be involved as an active consultant and manager and will also contribute funds. Sam and Tom are willing to accept liability for the firm's debts as they feel they have nothing to lose by doing so. All three individuals will share in the firm's profits and wish to keep the initial organizational costs of the business to a minimum. Which form of business entity should these individuals adopt?

Definitions:

Economic Development

The process by which the economic well-being and quality of life of a nation, region, or local community are improved according to targets of growth and development.

Infrastructure

The fundamental facilities and systems serving a country, city, or area, including transportation, communication, water, and power systems.

Price Controls

Government-imposed limits on the prices that can be charged for goods and services in a market, aiming to keep prices within a certain range.

Exports

Goods or services sent from one country to another for sale or trade.