Level 2: Ownership as a Business

Question 1

Sole Proprietorships

Answer 1

business assumed by an individual (or legal spouses as a single legal entity), sole proprietors are personally liable for their businesses

Question 2

Partnerships

Answer 2

businesses that have a co-ownership structure, two or more people enter into a for-profit enterprise and share the risks and rewards of the business

Question 3

Partnerships: General Partnership

Answer 3

each member equally assumes unlimited personal responsibility for the financial liabilities and obligations of the business

Question 4

Partnerships: Limited Partnership

Answer 4

some partners have less personal liability, comprised of at least one general partner and one limited partner

Question 5

Limited and General Partners Visual Aid

Question 6

Corporations

Answer 6

a company or a group of people who are considered a single entity under the law, because a corporation is legally treated the same as a single person, the corporate ownership of real estate is ownership in severalty

Question 7

Corporations: The owners

Answer 7

Shareholders (or stockholders) own the corporation in stocks

Question 8

Corporations: The board

Answer 8

The owners of the company (shareholders) are represented by the board of directors, who are elected by shareholders

Question 9

Corporations: The managers

Answer 9

These corporate officers run the day-to-day operations of a corporation

Question 10

Corporations: C Corporations

Answer 10

most common type of business legal structure that a corporation can take, this structure is subject to double taxation - the corporation itself pays income tax AND shareholders are taxed on dividends received

Question 11

Corporations: S Corporations

Answer 11

less-common corporation type passes its income or losses through to the shareholders (this is called having a “pass-through” taxation structure), these are limited to 100 shareholders or fewer, and the shareholders must be U.S. citizens or legal residents

Question 12

Limited Liability Companies (LLCs)

Answer 12

LLC members can manage the business themselves, or hire someone else to do it. Though the LLC structure protects members from personal liability for business debts, they can be held liable if another member does something illegal

Question 13

Limited Liability Partnerships (LLPs)

Answer 13

It’s similar to a limited partnership, except that all partners have limited liability — there is no general partner. Instead, any partners can be involved in management, but are still shielded from liability

Question 14

Business Legal Structures Visual Aid