Legal Guidelines and Business Considerations

Question 1

• for profit
• owned and operated by one person
• no meetings, owner decides everything
• no corporate
• debts and lawsuits can result in owner selling personal assets
• difficult to raise capital

Answer 1

sole proprietorships

Question 2

• owned and operated by two people
  usually two trainers who work together to build a business
• has same drawbacks as sole propiertoships

Answer 2

partnerships

Question 3

when someone invests and takes ownership of a percentage of a company

Answer 3

limited partnership

Question 4

• creates a separate entity from the investors to the business operators

Answer 4

corporation

Question 5

• most common

- profits flow through the business to the shareholders and get taxed as regular income

Answer 5

subchapter s corporation

Question 6

• require a lot of paperwork and attention to detail
• profits flow through the investors and taxed as income
• corporate veil protects against personal liability on investors
• tax forms are easier to fill and file

Answer 6

limited liability companies and limited liability partnerships

Question 7

• most of the largest companies use this type of corporation

- corporation is taxed as a company and shareholders pay taxes on their profits

Answer 7

c corporation

Question 8

• hired short term to perform specific tasks for the business
• paid by the job; once complete, they’re no longer needed

Answer 8

independent contractor

Question 9

• works for the business and is more regularly employed

- paid on a regular schedule

Answer 9

employee