Ellie and Bess opened an aerobics studio. It ran successfully for three years, and then a customer injured her back in one of Ellie's classes and sued Ellie and the company
Both Ellie and Bess lost their houses and their cars, and the women had to close the business. How could Ellie and Bess have better protected their assets?
A) They could have set up the business as a sole proprietorship.
B) They could have set up the business as a general partnership.
C) They could have set up the business as a limited partnership.
D) They could have set up the business as a limited liability partnership.
E) They could have set up the business as a B corporation.
Answer: D
Explanation: D) In a limited liability partnership, the liability of each partner—and the risk of losing personal assets—is limited to just his or her own acts and omissions and those of his or her directly reporting employees. Had the business been set up this way, Bess would not have lost her house or her car.
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