Question: John and Amelia have general commitments from a number of
John and Amelia have general commitments from a number of individuals to invest in their Sproondrift Cove Club golf course and distinctive residential community in Duval County. John wants to form a limited partnership. He realizes that every limited partnership must have a general partner who manages the business and is subject to unlimited liability for all debts and liabilities of the limited partnership. But he says that is no problem because the general partner can be a corporation and can limit its liability exposure by simply creating a "shell" corporation. John stated to Amelia, "As officers of the corporate general partner, you and I can operate the business without the limited partners interfering . we run the show!" Amelia responded, "John, what you propose seems so very complicated, risky, and expensive. A number of our investors are relatives who may want to be listened to, and some of our investors are professionals who could give us some valuable advice. Maybe a limited liability company would be a better entity for us." Compare the advantages and disadvantages of an LLC with a limited partnership and recommend the most appropriate form of business organization for this venture.
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