Business - Module Business Ownership

Define the business structure commonly known as a "sole proprietorship."

An unincorporated business owned and run by one individual in which there is no distinction between the business and the owner.

What would be the advantages of choosing a sole proprietorship over other legal structures of business?

The sole proprietorship would be cheaper to set up, the owner would have full control, the owner would be taxed as an individual, and the owner keeps all of the profits.

In a limited partnership:

a general partner runs the business.

Caitlin is invited to join a business as a partner due to her expertise in the field. She is asked to sign a partnership agreement that gives her 40% of the profits, full control of the marketing activities only, but final say on all other decisions goes to the original owner. She is joining:

A limited partnership.

Which of the following entities can pursue a broader mission that may sometimes be at odds with maximizing profits for shareholders:

B corporation.

You are thinking about starting your own business. What are the most important factors you should consider when thinking about your form of business ownership?

Cost of start up, taxation and risk tolerance.

The following are all advantages of business partnerships EXCEPT:

Partnerships shield the individual partners from debt and liability.

Aamer is preparing to interview for a job opening he saw on an employment board. He does a little research and discovers that the business is run by three individuals. How could he tell if the business is a sole proprietorship with two employees or a partnership of three persons?

The distinction would be if the three persons share legal ownership.

A ________ is owned and managed by a group of individuals who share in decision-making and risk.

partnership

The disadvantages of partnerships include:

the need to share decision making across the partners.

Some of the major advantages of incorporating your business are:

Limiting your personal liability, raising capital through the sale of stock, and alleviating disagreements among partners.

What is the purpose of a B Corp and what are the general requirements for operation?

Make a commitment to creating general public benefit; prepare an annual benefit report, pay an annual fee and adopt a third-party standard.

Anthony is starting a business and he is thinking about the costs associated with getting his business established because he does not have a lot of money to spend. Which form of ownership would cost Anthony the least to set up and why?

Sole proprietorship because he would not have to hire a corporate attorney to draft corporate charters, agreements, and articles of incorporation.

What are the most important factors to consider when choosing an organizational type for your business?

Start-up costs, taxation, and control.

The most significant differences between C and S corporations have to do with:

Taxation, administration, and shareholder compensation.

The main thing that makes S Corporations different from C Corporations is:

That the business is not taxed itself. Only the shareholders are taxed.

Which of the following is a downside of choosing a business structure where the owner has full control?

The owner has full responsibility and liability for the business.

A thirty-five-year old entrepreneur with dependents is considering starting a business. She is concerned about protecting her personal assets and making sure that if her company were to fail, she would not lose her home or personal savings. This is an example of an individual:

With low risk tolerance.

The disadvantages to starting and running a corporation include:

double taxation

A(n) ________ is an unincorporated business owned and run by one individual in which there is no distinction between the business and the owner.

sole proprietorship