Fred and Wilbur are good friends who want to start a constru

Fred and Wilbur are good friends who want to start a construction business. Fred has amassed a very large personal savings and Wilbur has very little. They plan on hiring some employees, but both want to keep the managing of the business between themselves. The startup money will come from a bank loan, family and friends interested in investing or, as a last resort, Fred’s personal savings.

In this example should Fred and Wilbur form a sole proprietorship, a general partnership or a corporation? Demonstrate your understanding of business organizations’ costs, management and liability in your explanation. Also explain why the other choices would not be preferable.  

Solution

this kind of firm should be called as general partnership only. because they raised funds from bankers by providing some security and from theri relatives and friends only. so, it should be called as general partnership firm.

if they invested whole amount by their own, then it should be called as sole propritorship firm. but in this exmple it is not happens.

if they raised capital from public interms of issuing shares then it should be called as corporation. this also not happens in this example.

so, it should be called as general partnership firm only.