ch 31 practice

Which of the following are qualities of a non-profit corporation?

Its goal is to earn a profit. It does not provide dividends to shareholders.

The simplest form of business to establish is a:

sole proprietorship.

The owner of a sole proprietorship pays the following taxes on business income profits:

-Social Security -Medicare -Personal Income

Which of the following is a requirement for the formation of a limited liability company (LLC)?

articles (or certificate) of organization

Which of the following provisions are typically in an operating agreement for a limited liability company (LLC)?

how membership interests may be transferred whether the dissociation of a member, such as by death or departure, will trigger dissolution of the LLC

A sole proprietorship differs from a corporation in:

how stock is sold.

Most limited liability company (LLC) statutes provide that unless the articles of organization specify otherwise, an LLC is assumed to be managed by:

its members.

Johnson lives near Dollywood, a popular theme park in Tennessee. Johnson decides to begin a new money-making venture selling screen printed t-shirts from a booth just down the road from the theme park, to take advantage of the traffic that flows by on its way to the park. Johnson's t-shirts, however, will not be Dollywood-themed t-shirts; they will be Johnson's own creations. Johnson's daughter Susan helps him in his new venture by manning the booth from time to time, but Johnson has total control over everything about the business—from ordering the t-shirts, paying the bills, pricing the t-shirts, paying the taxes on his sales, and receiving all the profits from the venture. Even though Johnson put no thought into what kind of business venture he was creating when he started his business, Johnson has effectively created a:

sole proprietorship.

The formation of LLCs is governed by:

the laws of the state in which the LLC is created.

Lola, Jacy, and Tate plan to create a company to manufacture bicycles. After reviewing the pros and cons of the various forms of business enterprises, they decide to create a limited liability company. To create a limited liability company:

they must file a certificate of organization with the secretary of state and should create an operating agreement, although an operating agreement is not required.

An operating agreement for a limited liability company:

typically includes provisions about choosing the LLC's management.

In terms of personal liability of the owner, a sole proprietorship:

offers no protection.

A foreign corporation is:

one that was incorporated in a different state.

Jasper, Saul, and Kenyon plan to open a new business providing sky-diving lessons and selling sky-diving equipment. Each of them plans to contribute the same amount of money to get the business started, and each will work for the business. Jasper is concerned about the possibility of being liable for the acts of Saul and Kenyon. Jasper also wants to make sure he does not pay more taxes than required. After reviewing the types of business entities available, Jasper suggests to Saul and Kenyon that they organize their new business as a(n):

LLC.

Bart, Sam, and Greg create Big Barns Sales LLC, a company that builds pre-constructed barns. They file the certificate of organization with the secretary of state and create an operating agreement for the LLC. The operating agreement, however, does not address the how the company will be managed. The state statute regarding LLC management states that in the absence of an agreement otherwise, LLC's shall be member-managed. After a disagreement, two of the members want to dissolve the business, however, Sam wants it to continue. What is the outcome?

The business will be dissolved because majority vote wins.

Tala operates Sunshine Event Planning as a sole proprietorship. Lately, Tala has become dissatisfied with her employee, Leon. Leon continually refuses to follow directions, calls in late to work, and generally is not performing up to Tala's standards. Before Tala can fire Leon, she must obtain approval from

no one.

Which of the following documents spells out the rights and duties of the members of a limited liability company (LLC)?

operating agreement

Which statement is true about creating a sole proprietorship?

No documentation is required to create a sole proprietorship.

Which of the following is required in the Articles of Organization for an LLC?

The principal place of business The name of the business