2.01

Question 1

Which type of ownership is the most common in the US?

Answer 1

Sole Proprietorship

Question 2

Which type of ownership counts for the most revenue?

Answer 2

Corporation

Question 3

Which corporation is the easiest to form?

Answer 3

Sole Proprietorship

Question 4

Advantages of a Sole Proprietorship? (4)

Answer 4

Easy to form, complete control of business, Recipient of 100% of profit, one time taxation,

Question 5

Disadvantages of a Sole Proprietorship (3)

Answer 5

Limited Capital, Unlimited Liability, Limited Lifetime

Question 6

If the business fails you’re held responsible and they can come after your personal fortune

Answer 6

Unlimited Liability

Question 7

Sources of funding for sole proprietorship

Answer 7

Bank Loans, Gifts, Personal Investments , others may vary

Question 8

Who Manages a Partnership?

Answer 8

Determined by partnership agreement. It may be one or more partners, or someone that has been hired to manage the day-to-day operations.

Question 9

How is a Partnership Formed?

Answer 9

With a partnership agreement. Some states only require a verbal agreement but it is better to have a written agreement. Most states also require a business name and the name of each partner be registered. In North Carolina, partners must choose a name for their business, register the business name with the appropriate government entity, sign a partnership agreement, and then get a business license and/or permits.

Question 10

Advantages of Partnership (4)

Answer 10

Easy to form, More Capital and credit Available, Workload, more evenly shared, Losses are also shared.

Question 11

Disadvantages of Partnership (5)

Answer 11

Unlimited Liability, Limited Lifetime, profits are shared, decisions are made jointly, hard to add other partners.

Question 12

Sources of funding for partnership

Answer 12

Personal , borrowed, and others may vary

Question 13

How is a Partnership Terminated?

Answer 13

Partnerships are terminated by actions of the partners, bankruptcy, death, and/or court order.

Question 14

If an investor does not want to lose more than the amount of their investment and does not care to be involved in every day operations.

Answer 14

Limited Liability Partnership

Question 15

When the businesses only want to be partners for a limited time and for a specific reason/project.

Answer 15

Joint Venture

Question 16

This is used for partnerships or joint ventures that don’t have a formal agreement and just conduct business together. In this case, partners may or may not be aware of their formed partnership.

Answer 16

By Proof of Existence

Question 17

Active, Known to the public, Unlimited Liability

Answer 17

General

Question 18

Not active, unknown, unlimited liability

Answer 18

Dormant

Question 19

Not active, known, limited liability

Answer 19

Limited

Question 20

Active, Unknown, Unlimited Liability

Answer 20

Secret

Question 21

Not active, known, unlimited

Answer 21

Silent

Question 22

Who owns a corporation?

Answer 22

The stockholder (shareholders), An entity with the legal authority to act as a single person.

Question 23

How is ownership determined

Answer 23

Determined by purchase of stock

Question 24

How are corporations formed?

Answer 24

Filing of an article of incorporation with state government. The business must create corporate bylaws, name a board of directors, and issue shares of stock. In North Carolina, the business must choose a name, choose board of directors, file articles of incorporation, create bylaws, hold a meeting, issue stock, obtain licenses, determine tax obligations, and open a bank account for the business.

Question 25

Who manages a corporation?

Answer 25

Managers, board of directors, and shareholders

Question 26

Advantages of a Corporation (5)

Answer 26

Capital easy to obtain, Limited liability for shareholders, Can invest without having to manage day-to-day operations, Possibility of unlimited lifetime of business, Decision-making is shared.

Question 27

Disadvantages of a Corporation (4)

Answer 27

Double Taxation, Subject to more laws than other types of ownership, More difficult to form, Operations controlled by shareholders and board of directors instead of original owner(s)

Question 28

This type of corporation treats each partner/owner as an individual by taxing them only one time.

Answer 28

S-Corporation

Question 29

Used by small businesses to receive limited liability protection. No articles of incorporation or bylaws are needed.

Answer 29

Used by small businesses to receive limited liability protection. No articles of incorporation or bylaws are needed.Why would a small business operate as a limited liability company?

Question 30

Benefits the public and is exempt from taxation. May get grants from the individuals or businesses to raise funds.

Answer 30

Non-Profit Corporation

Question 31

Formed by a group of individuals or businesses to serve their needs in order to gain bargaining power against bigger businesses. Also, allows for goods or services to be purchased at a lower price as a group and is owned by the members of the ……

Answer 31

Cooperatives

Question 32

A franchise grants permission to sell products and services to another business. It offers brand/product recognition and a proven format of business that is successful.

Answer 32

Franchise