Ch 4 How to Form a Business SmartBook

owned businesses are growing at more than the national rate.

Blank 1: Minority

A unique government creation that looks like a corporation but is taxed like a sole proprietorship or partnership is called a(n) corporation.

Blank 1: S

One company's purchase of the property and obligations of another company is a(n) .

Blank 1: acquisition or buyout

A partnership can spell out the requirements of terminating a partnership.

Blank 1: agreement

A partnership can spell out the requirements of terminating a partnership. Listen to the complete question

Blank 1: agreement

In addition to the articles of incorporation, a corporation has , which describe how the firm is to be operated from both legal and managerial points of view.

Blank 1: bylaws

The actions of a fellow franchisee will affect your franchise. This is known as the .

Blank 1: coattail Blank 2: effect

A major disadvantage of the corporate form deals with the tax situation called taxation.

Blank 1: double or dual

Franchisors often use technology to meet the needs of both their customers and their because technology makes communication faster and more widespread.

Blank 1: franchisees, employees, suppliers, investors, or stakeholders

Mark, Cal and Aidan have decided to form a business where all owners will share in operating the business and in assuming liability for the business debts. They are most likely forming a(n) partnership.

Blank 1: general

Don wanted to incorporate his business and liked the attributes of an S-corporation, however, he did not feel the eligibility requirements would work for his purposes. He is likely to choose to form a(n) company.

Blank 1: limited Blank 2: liability

A form of business ownership that provides limited liability, as in a corporation, but is taxed like a partnership is a(n) company.

Blank 1: limited or s Blank 2: liability or corporation

Franchises are expanding internationally to access additional that have new customers and to increase their profit potential.

Blank 1: markets

The result of two firms (usually corporations) combining to form one company is called a .

Blank 1: merger

When two firms join together to form one new company, it is called a(n)

Blank 1: merger

About 30 percent of franchises are owned by African Americans, Latinos, Asians, and Native Americans. Franchisors are becoming more focused on recruiting franchisees.

Blank 1: minority or diverse

A key advantage of a home-based franchise is low costs, which can be ongoing. These are the costs associated with rent, utilities, and other fixed costs.

Blank 1: overhead or operating

An LLC submits a written operating agreement, similar to a(n) agreement, describing how the company is to be operated.

Blank 1: partnership

Unlimited liability as it relates to sole proprietorships is the risk of loss of assets beyond the assets of the business.

Blank 1: personal

Stockholders are from the managers and employees of the firm because they are not actively involved in the operations of the firm.

Blank 1: separate or independent

Gathering leads on a company website, selling products and keeping up to date on news via email, and chat rooms all serve as examples of using to assist franchisees and customers.

Blank 1: technology

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

Blank 1: unlimited Blank 2: liability

A merger between a soft drink company and an artificial sweetener maker could be considered a(n) merger.

Blank 1: vertical

What are some of the disadvantages of a corporation?

Cost of forming a corporation Double taxation

True or false: If producers, consumers, or workers with similar needs pool their resources for mutual gain, they have created a franchise.

False

True or false: Partnerships are less likely to survive than sole proprietorships.

False

What are some of the advantages of franchising?

Financial advice Lower failure rate Recognized name

Which of the following are true regarding the process of forming a corporation.

The bylaws of the corporation describe how the firm is to be operated The articles of incorporation must be filed in the state in which the company will be incorporated

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

True

A(n) ______ is where one company purchases the property and obligations of another.

acquisition

One company's purchase of the property and obligations of another is called a(n):

acquisition

A unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships is:

an S corporation

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

articles of incorporation and bylaws

Many people do not like working for someone, so being your own is an advantage of sole proprietorships.

boss

A business owned and controlled through pooled resources by the people who use it is a(n) ______.

cooperative

When producers, consumers, or workers with similar needs pool their resources for mutual gain, they start a(n):

cooperative

A state-chartered legal entity with authority to act and have liability separate from its owners is a:

corporation

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

An agreement that gives a business the right to use a business's name and sell a product or service in a given area is a(n):

franchise

Financial advice and a nationally recognized name are both benefits of owning a(n)

franchise

A partnership where all owners share in operating the business and in assuming unlimited liability for the business's debts is a:

general partnership

Relief from the stress of commuting, extra time for family activities, and low overhead expenses are all advantages of - franchises.

home based

The attributes of a corporation include that:

it is a legal entity corporate liability is separate from owners it is state chartered

LLCs do have to submit articles of organization and an operating agreement, but do not have to:

keep minutes file written resolutions hold annual meetings

Franchises offer those starting a business the advantage of a recognized name, management assistance, and:

lower failure rates

An advantage of starting an online franchise is that:

no upfront fee may be required franchisees pay only a set monthly fee online franchisees can compete in world markets

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

partnership

Termination of a partnership is difficult without a(n) ______ agreement.

partnership

two people join one business together

partnership

Studies have indicated that partnerships are four times more likely to succeed than:

sole proprietorships

Franchises are attractive to minority populations because:

some offer financial support to aspiring business owners they provide personal ownership of a business

Because of the poor publicity at a fellow franchise location, you notice that sales at your location have decreased. The impact of the poor publicity on your company is referred to as

the coattail effect

Many franchises are expanding internationally because:

there are large new markets available

One of the most notable advantages of an online franchise is

there is no brick-and-mortar real estate cost.

In a sole proprietorship, any debts or damages incurred by the business are your personal debts and you must pay them. This disadvantage is known as:

unlimited liability

A merger that joins two companies involved in different but related levels of an industry is a(n) ______ merger.

vertical

Many brick and mortar franchisees are using ______ to expand their businesses online to lower costs and better meet the needs of their customers.

websites e-commerce technology

When two firms operating in different stages of related businesses join, it is called a(n) merger.

Blank 1: vertical

Rank the order in which members of a corporation are chosen in order to separate ownership from management. Start at the top of the managerial hierarchy. (Fig. 5.4) Instructions

1, Owner/ Stockholder elect board of directors 2,Board of Directors hire officers of the corporation 3, Officers hire managers of the corporation 4, Managers hire employees

A corporation is formally formed with:

Blank 1: entity

The right to use a specific business' name and sell its products or services in a given territory is a(n) agreement.

Blank 1: franchise