Module 10- Forms of Business Organization

Question 1

What three different types of owning a business?

Answer 1

1. Sole proprietorship
2. Partnership or limited partnership
3. Corporation

Question 2

This business has the least requirements for set up and costs(might just need business license), it has one owner, all its earnings are taxed as that owners income. What business type is this?

Answer 2

Sole Proprietorship

Question 3

Whats a con to Sole Proprietorship?

Answer 3

-There is no legal distinction between the business and its owner ( Bob Smith owning Bob Smiths Plumbing)
-The other has unlimited personal liability for all debts and obligations of the business.
For example if bob smiths plumbing gets sued, business assests and personal assets can be taken to cover damages

Question 4

What type of business involves 2 or more people operate a business for the purpose of making a profit?

Answer 4

A Partnership

Question 5

How can partnerships be created?

Answer 5

A written or oral agreement OR an operation of law.

Question 6

Creation of partnership by operation of law

Answer 6

If each partner: contributes capital($), shares net income, and participate in management….they are acting like partners and the law can imply that they are partners.

Question 7

PROS of partnership

Answer 7

jdfskl

Question 8

CONS of partnership

Answer 8

PArtners have joint and several liability.

Question 9

Joint and several liability

Answer 9

All partners are fully responsible for all debts of the partnership, as well as they are each responsible for their “share” of the partnerships debts.

Question 10

Who is most at risk in a partnership business?

Answer 10

The partner with the most assests. The banks are allowed to go after the ‘richest’ partners becasue of partnership law.

Question 11

Limited Partnership

Answer 11

is a variotion on partnership. It allows someone to invest in a partnership without having the potential liability without being considered a regular partner

Question 12

2 types of partners in limited partnership

Answer 12

general and limited. The general partner has unlimited liability. the limited partner is only liable for their original contribution.

Question 13

Limited partners

Answer 13

they cannot take part in management of the partnership. if they do, they become a regular partner and are more liable.

Question 14

The Corporation

Answer 14

The corporation is a distinct legal entity. CORP= “person”
You would get to schoose you =r own name, but you must have INC, CORP, or INC.
Chloe Carmichaels Cooking Corp.

Question 15

What is a dividence

Answer 15

A share in profits

Question 16

What is taken away if a corporation is sued?

Answer 16

The corporations assets, the individual shareholders are not responsible

Question 17

Limited Liability

Answer 17

Banks having no access to your personal assets