Introduction to Business Chapter 5 How to Form a Business

Rank the forms of business ownership based on ease of starting. Put the easiest form at the top. - Partnership - Sole proprietorship - Corporation

1. Sole proprietorship 2. Partnership 3. Corporation

True or False: If you and a friend start a business together, you have started a sole proprietorship.

False

True or False: The main advantage of a sole proprietorship is ease of start up.

True

A corporation is defines as _____.

a legal entity with authority to act apart from its owners

A legal entity with authority to act and have liability apart from its owners is a _____.

corporation

A(n) _____ is a chartered legal entity with authority to act and have liability separate from its owners.

corporation

Sole proprietorships far outnumber ______ and _____, but they net far fewer and less income.

corporations partnerships

A corporation is a legal _____ with authority to act and have liability separate from its owners.

entity

Partnerships have the advantage over sole proprietorships of pooled knowledge and _____ resources.

financial

One of the most important advantages of the sole proprietor form of ownership is that a business owner _____.

finds it easier to start and end the business

The three major types of partnerships are _____.

general, limited, and master limited

A _____ partnership has partners who do not share in operating the business.

limited

A legal form of business with two or more owners is a(n) ______.

partnership

Unlimited liability as its release to sole proprietorships is the risk or loss of _____ assets beyond the assets of the business.

personal

If you start and manager a landscaping business on your own, you have likely started a _____.

sole proprietorship

The easiest type of business entity to form is a

sole proprietorship

The most common form of business ownership is a _____.

sole proprietorship

What are the three major forms of business?

sole proprietorship, partnership, corporation

The responsibility of the owner of a sole proprietorship for all of the debts of the business is _____ liability.

unlimited

When any debts or damages incurred by the business are your debts or damages it is called _____ liability.

unlimited

A key disadvantage of operating a sole proprietorship is:

unlimited liability

If your company's debts or damages are solely your responsibility you could be experiencing the disadvantage associated with owning a sole proprietorship called _____ _____.

unlimited liability

The disadvantage of sole proprietorships is that any debts or losses incurred by the business are your debts because you and the business are legally one and you have _____.

unlimited liability