Chapter 17: Legal Issues: Recognizing Your Small Business NeedsAssignment

When an employer is sued for an accident caused by an employee, it is called a(n) ___ liability.

vicarious

When an employer is sued for an accident caused by an employee, it is called a(n) ___ liability. (Please enter one word.)

vicarious

Identify a disadvantage of limited liability companies (LLCs).

All members' consent required for reducing LLC members

Disadvantage of sole proprietorship

Extensive liability for a firm's debts Insufficient management and employee skills

______ is a formal dispute resolution method that operates using the court system, typically with a lawyer representing each party.

Litigation

Identify an advantage of limited liability companies (LLCs).

More flexible reporting requirements than C corporations

Which of the following are advantages of sole proprietorships? (Check all that apply.)

Simplest form to organize and operate Relative freedom of control

______ taxation is where a business' earning are taxed once with the owners paying the taxes.

Single

Which statement about plant patents is correct?

They last for 20 years They cover new strains of living plant organisms

Check the box taxation means that

an LLC can choose whether to be taxed as a corporation or as a partnership.

The articles of partnership is

an agreement between the partners of a firm on matters pertaining to the formation and operation of the partnership.

Vicarious liability against a business is possible if

an employee involved in an action leading to an injury to a person was a representative of the business

Pass through taxation is when the business' earnings

are distributed to the owners who is taxed at their individual rate.

Double taxation is where a

corporation's earnings are taxed at the corporate rate, and shareholders are taxed on dividends at their individual rate.

Someone who uses intellectual property without the owner's permission is known as a patent

infringer

A(n) ______ is a contract by which a new party agrees to perform a duty that one of the original parties to a contract was already legally obligated to perform.

subcontract

Identify a disadvantage of sole proprietorships.

Difficulty in acquiring credit

property is property coming from some sort of original thought.

Intellectual

______ patents last for 20 years and cover new strains of living plant organisms, algae, or macro fungi.

Plant

Relational

The person is employed for a project and the service the person provides is not central to the operation of the business.

Identify a disadvantage of partnerships in business.

Unlimited liability for debts of a firm

Confidential information within a company that gives that company a competitive advantage is known as

a trade secret

Litigation is a

formal dispute resolution method using the court system, typically with a lawyer representing each party.

A______ is a person or other entity filing a lawsuit.

plaintiff

Intellectual property is

property coming from some sort of original thought.

True or false: A patent infringer is subject to both being sued by the patent holder and criminal prosecution.

False

Which of the following are disadvantages of partnerships in business? (Check all that apply.)

Finite life Responsibility of each partner for the acts of every other partner

Which of the following statements is true of a subcontract?

It is a contract by which a new party consents to perform a duty that one of the original parties to a contract was legally obligated to perform.

The ___ is a document setting forth information about a limited liability company and is filed with the state to establish it.

articles of organization

A guideline that an entrepreneur should follow to help manage and deal with any propensities he or she might have for paranoia is to Blank______.

identify the predictable surprises of business and life

A design patent

lasts 14 years for a new, original, and ornamental design for an article of manufacture.

A being, human or nonhuman, such as a corporation, that is recognized as having rights and duties, such as the right to own property is known as a(n) ______.

legal entity

A(n) ______ clause is part of a contract in which a person agrees not to open a certain type of business or seek employment doing certain things in a particular area for a period of time.

noncompete

______ clause is part of a contract in which a person agrees not to open a certain type of business or seek employment doing certain things in a particular area for a period of time.

noncompete

The name under which a business is operated is called a(n) ____ name

trade

______ is confidential information within a company that gives the company a competitive advantage.

trade secret

Which of the following statements about the 501(c)(3) designation are correct? (Check all that apply.)

It refers to a section of the US Tax Code that specifies the conditions for a nonprofit organization to be certified tax-exempt. The IRS is the agency that determines whether an organization qualifies for tax-exempt status. Donations to these IRS certified organizations are tax-deductible.

Which of the following statements regarding the Sarbanes-Oxley Act are correct? (Check all that apply.)

Its purpose is to make the financial activities of companies more visible to the shareholders, government, and public. Companies must preserve data and track its use. It was created by legislation because of the Enron scandal.

Which of the following are disadvantages of limited liability companies (LLCs)? (Check all that apply.)

More fees than partnerships Amount of paperwork larger when compared with sole proprietorships

Which of the following are advantages of limited liability companies (LLCs)? (Check all that apply.)

No double taxation Legal entity separate from companies' owners as individuals

______ is a grant by the U.S. government to an inventor for an idea that is new, useful, and nonobvious, giving the inventor the exclusive right to make, use, or sell his or her idea.

Patent

Identify the guidelines that an entrepreneur should follow to help manage and deal with any propensities he or she might have for paranoia. (Check all that apply.)

Planning to be open and honest from the start of a business Checking with a lawyer early in a start-up process

The ______ Act is a federal law describing the steps publicly traded businesses must take to protect and provide their key financial information.

Sarbanes-Oxley

Which of the following are examples of trade secrets? (Check all that apply.)

The name of a key employee A recipe Details of new products being released

Advantages of partnership

Use of ideas and plans of more than one individual Splitting of management and labor responsibility

The ______ is an agreement between the partners of a firm on matters pertaining to the formation and operation of the partnership.

articles of partnership

An operating agreement is a

contract among LLC members outlining how the LLC will conduct itself.

A(n) ______ agreement is a contract among LLC members outlining how the LLC will conduct itself.

operating

The articles of ___ is the document setting forth information about a limited liability company that is filed with the state to establish an LLC.

organization

When shareholders are taxed at their individual rate for the S corporation's earnings, it is called ___ taxation.

pass through

______ is a contract by which a new party agrees to perform a duty that one of the original parties to a contract was already legally obligated to perform.

subcontract

Identify the characteristics that a person has to display to be an independent contractor for small businesses according to the Internal Revenue Service (IRS). (Check all that apply.)

Behavioral Financial Relational

The ___ taxation is where a corporation's earnings are taxed at the corporate rate, and shareholders are taxed on dividends at their individual rate.

Double

The ______ taxation is where a corporation's earnings are taxed at the corporate rate, and shareholders are taxed on dividends at their individual rate.

Double

Financial

The person pays his or her personal expenses directly instead of having an employer pay the expenses.

Behavioral

The person solely determines how the work is to be done.

Identify an advantage of sole proprietorships.

Unique tax benefits

A noncompete clause is part of a contract in which

a person agrees not to open a certain type of business or seek employment doing certain things in a particular area for a period of time.

A noncompete clause is part of a contract in whichA noncompete clause is part of a contract in which

a person agrees not to open a certain type of business or seek employment doing certain things in a particular area for a period of time.

Vicarious liability against a business is possible if ___.

an employee involved in an action leading to an injury to a person was a representative of the business

A ______ patent lasts 14 years for a new, original, and ornamental design for an article of manufacture.

design

Single taxation is where

earnings of a business are taxed once with the owners paying the taxes.

There are four ways attorneys typically charge: hourly fees, flat fees, contingency fees, or

retainer

A doing business as (dba) name is also called a(n)

trade

A doing business as (dba) name is also called a(n)______ name.

trade

A(n) ____ is a person or other entity being sued by one or more plaintiffs.

defendant

Which of the following statements regarding patents are correct? (Check all that apply.)

There are several different types of patents including design and utility patents. The U.S. Patent Office, also known as the USPTO, located in Washington, DC, is the agency in charge of deciding whether a patent will be issued. A tax patent can be issued for a legal method of decreasing or deferring taxes.

Which of the following statements about legal entities are correct? (Check all that apply.)

They may own property. They have rights and duties apart from the owners of a company.

True or false: 501(c)(3) is the U.S. Tax Code section that specifies the conditions for a nonprofit organization to be certified tax-exempt, thus it does not pay any federal income taxes.

True

A trade secret is

confidential information within a company that gives the company a competitive advantage.

____ property is property coming from some sort of original thought.

Intellectual

Identify an advantage of partnerships in business.

Variety of specialized skills possessed by each partner

The choice that LLCs can make on their tax returns to be taxed as a corporation or a partnership is called ___ taxation.

check the box

Which of the following are ways that attorneys typically charge for their services? (Check all that apply.)

contingency fee flat fee hourly fee retainer