ent test 2

A sole proprietorship is very popular among individuals who

-are unsure about their business idea -have a business where the costs and risks are low -have a very small business

What insures businesses from damages caused by workers in the performance of their jobs.

Bonding

What are the two broad categories of partnerships?

General and Limited

What are common examples of licenses and permits?

Occupancy permits, OSHA food handling permits, Business licenses

What is a characteristic of a general partnership that is different from that of a sole proprietorship?

Partners are generally held to be jointly liable for all debts incurred by the partnership

In which business forms do the business debts flow directly to the owner(s)?

Sole proprietorships, General partnership

Which form of insurance covers liability for workers who are injured on the job?

Worker's Compensation

What are disadvantages associated with Subchapter S Corporations?

-Expensive, complex formation compared with sole proprietorships -May require a lawyer to process paperwork -Limitation on the number of shareholders

Which form of business involves two or more individuals sharing unlimited liability in a business venture?

General Partnership

A more complex business form that has two or more people sharing unlimited liability in a new business venture is called a general

Partnership

Which type of legal business organization is the simplest form to establish?

Sole Proprietorship

Identity the true statements about the Uniform Partnership Act and the Revised Uniform Partnership Act.

-Their provisions do not cover issues like noncompete agreements. -They are an effective means to handle the basics of partnerships.

A trademark is valid for ________ years and can be renewed as long as the firm or product is active.

10 years

Which law requires that there be no discrimination in the hiring, management, or dismissal of employees with disabilities?

Americans with Disabilities Act

A ___________ is an agreement between two parties to perform certain activities for some consideration.

Contract

Which of the following are the results of violating a trademark?

-Be required to pay monetary damages -be required to change the name

What are trademarked by most large companies?

-Company name -Company tag lines -Company Symbols

What elements are required when forming a Subchapter C or Subchapter S corporation?

-General nature of the business -Names, addresses, and titles of all founders -Location of corporate headquarters

What are benefits of a Subchapter S Corporation?

-Relatively easy to form compared w Subchapter C -Legitimacy in the market as a more establishment form of business -Consolidation of business and personal income for tax benefits -Limited liability for the owners

What must be formally addressed by both Subchapter C and Subchapter S Corporations?

-Reporting standards to local, state, and federal authorities -Authorization of more shares of stock -Holding annual board meetings

What is true about a board of advisors?

-The group advises the founder on key issues -The group is formed at the discretion of the founder -The group is composed of individuals outside the business

A copyright can be claimed on creative materials generated such as:

-artwork -advertising copy -books -unpublished music

Two related entities that can help the new business owner foresee potential legal liabilities are:

-board of directors -board of advisors

A board of ________ is formed at the discretion of the founders and composed of individuals outside the business who advise the founders.

Advisors

True or False: A subchapter C corporation treats fringe benefits that are paid out as income for its employees.

False

A Subchapter C Corporation has a __________ that is equal to the par value times the number of shares distributed.

Floor value

What is NOT one of the three basic types of legal business organization?

Franchise

Which class of partner in a limited partnership is considered the manager of the firm and has unlimited liability for any debts or judgements against the firm?

General

In recent years, the ________ has become one of the most popular forms of incorporation for new businesses.

LLC

What industries would be highly regulated by the government?

Medical-related industries, Industries involving alcohol, and Military-related businesses

Because it is expensive to obtain and maintain, a(n) __________ should only be obtained if it contributes to the sustainable competitive advantage of the organization.

Patent

An advantage of the Subchapter __________ Corporation is that it allows the owners to report their income or losses on their personal income tax returns, thus avoiding double taxation.

S

What are the three basic types of legal business organization?

Sole Proprietorship, Corporation, and Partnership

Which form of incorporation is required to pay income tax

Subchapter C

What forms of incorporation is required to pay income tax, which results in double taxation?

Subchapter C Corporations

Which of the following business forms are required to hold annual board meetings and file reports to local, state, and federal authorities?

Subchapter S Corporation and Subchapter C Corporation

What are types of corporations developed by the U.S Legal System?

Subchapter S, Subchapter C, LLC

True or False: If a corporations suffers substantial losses, the founder(s) will lose only his or her investment in the business.

True

True or False: It is advisable for an entrepreneur to employ formal written contracts whenever there is an agreement with another party.

True

A _______ patent is for a new process, machine, article of manufacture, or composition of matter, or any new and useful improvement of those.

Utility

A board of ______ is required of corporations, but a board of _______ is the optional regardless of the legal form.

directors; advisors

A Corporation pays a tax on its profits; then those after tax profits are paid as dividends to the owners, who then have to pay personal income taxes on the dividend income. This situation is referred to as ____________.

double taxation

General and Limited are two broad categories of

partnerships

What are true statements about a Subchapter C Corporation?

-It considers the owners as employees and pays them salaries and bonuses -Profits that are not paid out for such items as salaries are retained for future expansion

What are the characteristics of a subchapter C Corporation?

-It does not provide any protection for the owners beyond their equity investment. -It does not have any limits on shareholder participation

What are the characteristics of limited liability partnership (LLP)

-They are considered passive investors, and their liability is limited to their investment in the business -They are typically allowed to work for the firm

Which type of insurance helps protect a business against lawsuit judgments?

Liability

Which form of business has at least two individuals who are partners in a venture but only one person declares a full pass-through of all income on his or her federal taxes and assumes unlimited liability?

Limited Liability Partnership

An individual who is unsure of his business idea, plans to keep him business very small, or has minimal amount of cost and risk is more likely to select a ___________ business form.

Sole Proprietorship

Which type of legal business organization is characterized by the fact that the person who owns the business and the business itself are treated as the same entity?

Sole Proprietorship

Which of the following is a characteristic of general partnerships that is similar to that of sole proprietorships?

The owners report their shares of losses or profits on their own personal income tax returns in proportion to their interest in the firm

A _______ is legal protection of the intellectual property that is associated with a specific business

Trademark

The critical issues of personal liability and the desire to limit exposure to the original equity investment led to the development of corporations. A corporation addresses both drawbacks by

considering the business and the individual separate entities

What are types of patents?

utility, design, plant

Subchapter S and Subchapter C Corporations take their names from subchapters in the ____________ code

Internal Revenue

Unlike a Subchapter C Corporation, a limited liability corporation (LLC) _______________.

allows for the flexible treatment of profits from the organization

In new corporations, the shareholders and board of _________ are often the same individuals.

directors

What are characteristics of a Subchapter C Corporation?

-It does not have any limits on shareholder participation -It does not provide any protection for the owners beyond their equity investment

The Americans with Disabilities Act (ADA) applies fully to any business with more than __________ employees and in some communities has been applied to all business.

15

The effective application of __________ is one means to limit liability concerns of the new venture.

insurance

A business owner hires a mechanic to work on cars owned by the customers. The mechanic makes a mistake that leads to significant and costly damage to a customer's car. Which type of insurance can be purchased to cover the damages?

Bonding

In the United States, a _________ is assumed to apply to anything that is your own original work (whether that original work itself is filed w the government or not).

copyright

Which of the following are characteristics of limited partners in a limited liability partnership (LLP)?

-They are typically allowed to work for the firm -They are considered passive investors, and their liability is limited to their investment in the business

What are drawbacks of sole proprietorships?

-the formation is limited to a singe founder -The liability of the business is the responsibility of the single owner -The lack of legitimacy with the suppliers and customers

What forms of business have two classes of partners

limited liability partnership

What are the least expensive corporation types to form?

Limited Liability Corporations (LLC)

For tax purposes, all businesses must have a(n)

employer identification number

True or False: the greater the insurance coverage obtained by a new business, the lower the cost.

False

True or false: According to contract law, the term length of lease contracts involving new businesses should be more than two years.

False