Which type of business involves two or more people sharing profits and unlimited liability?

Which type of business involves two or more people sharing profits and unlimited liability?

• A. Sole Trader
• B. Partnership
• C. Sleeping Partner
• D. Entrepreneur

Answer: (B)

Two or more people sharing profits and unlimited liability describes a partnership. In a partnership, owners come together to run the business, and profits are shared according to an agreement. Unlimited liability means each partner is personally responsible for the business debts, so their own assets could be used to cover what the business owes. This sets partnerships apart from a sole trader, which is run by one person who also bears unlimited liability, and from the idea of an entrepreneur, who is just the person starting a business rather than a specific business form. A sleeping partner is a partner who provides capital and may share profits but doesn’t manage daily operations; they’re still part of a partnership and share the same unlimited liability, so the overall concept aligns with partnership rather than a separate business type.

Two or more people sharing profits and unlimited liability describes a partnership. In a partnership, owners come together to run the business, and profits are shared according to an agreement. Unlimited liability means each partner is personally responsible for the business debts, so their own assets could be used to cover what the business owes. This sets partnerships apart from a sole trader, which is run by one person who also bears unlimited liability, and from the idea of an entrepreneur, who is just the person starting a business rather than a specific business form. A sleeping partner is a partner who provides capital and may share profits but doesn’t manage daily operations; they’re still part of a partnership and share the same unlimited liability, so the overall concept aligns with partnership rather than a separate business type.