Business Ownership

Question 1

Owned and run by one person

The simplest and most common legal structure for a business

Answer 1

Sole proprietorships

Question 2

Account for the majority of therevenuefrom business in the U.S.
Are the most complex type of organizationto start and maintain
Are NOT the mostcommonform of business ownership

Answer 2

corporations

Question 3

Are independent legal entities owned by shareholders
Pay income tax on their profits
Dividends appear on the shareholder’s personal tax returns and are subject to taxation
Income distributed as salary or othercompensation is a deduction for the corporation

Answer 3

C Corporations

Question 4

Special type of corporation created through and IRS tax election
Profits and losses can pass through to your personal tax return
The business is not taxed. Instead, only the shareholders are taxed

Answer 4

S Corportations

Question 5

Type of for-profit corporate entity, authorized by thirty U.S. states and the District of Columbia,that includes positive impact on society, workers, the community, and the environment

Answer 5

Benefit Corporations

Question 6

Hybrid business structure allowed by state statute.
Provide the limited liability features of a corporation
Unlike shareholders in a corporation, are not taxed as a separate business entity
Profits and losses are “passed through” the business to each member of the LLC

Answer 6

LLC

Question 7

limited liability partnership
A partnership in which some or all partners have limited liabilities
One partner is not responsible or liable for another partner’s misconduct or negligence
Partners may manage the company directly without electing a board of directors
Profits are allocated among the partners for tax purposes, avoiding the problem of “double taxation” often found in corporations

Answer 7

LLP

Question 8

is the consolidation of two companies that, prior to the merger, were operating as independent entities

Answer 8

merger

Question 9

occurs whena company purchases the assets of anotherbusiness (such as stock, property, plants, equipment) and usually permitsthe acquired company to continue operating as it did prior to the acquisition

Answer 9

acquisition

Question 10

occurs between companies in the same industry

Answer 10

horizontal merger

Question 11

is characterized by the merger of two organizations that have a buyer-seller relationship or, two or more firms that are operating at different levels within an industry’s supply chain

Answer 11

vertical merger