Entrepreneurship Chapter 6
Non-Profit Corporation
501-c3
C Corporation
A corporation that pays taxes on profits and provides personal liability protection for its owners
What is a subchapter S corporation?
A corporation that provides limited liability to its owners and is taxed like a partnership. It is intended for small businesses with fewer than 100 stockholders.
Sole Proprietorship
A for-profit business that is owned and operated by a single person
What is a charter, and what form of business requires one?
A legal document describing the purpose, place of business, and other details of the corporation
Silent Partner
A person who invests in a business but takes no part in the day-to-day operations of the business
Name four start-up strategies for businesses.
Do your research; Establish the value of the business; Review the laws; Get help from the professionals
A business must incorporate in a state where it is physically located.
F
Buying an existing business eliminates the potential problem of reluctant partners.
F
One advantage of joining a family-owned business is that conflicting interests are rarely a problem.
F
The process of buying a franchise begins with the franchise disclosure document.
F
The tax benefits of a partnership are similar to those of a corporation
F
A subchapter S corporation is intended for small businesses that have
Fewer than 100 stockholders
One of the advantages of a family-owned business is
Flexibility
What does a partnership agreement specify?
How much each partner will invest, partners responsibilities, how profits are to be shared
Name four organizations that can provide resources on state, local, and national franchise laws.
IFA, SBAM US department of commerce, FTC franchise rule compliance
What is an LLC
Limits the personal liability of the owners and can provide tax benefits. There is limited liability, less paperwork, and owners can share the profits however they choose. Not every state allows them to operate
What is an LLP
Limits the personal liability of the owners and can provide tax benefits.There is limited liability, less paperwork, and owners can share the profits however they choose. large law and accounting firms are ____ is that they can be an ____ in every state
The owners of an LLP are called
Partners
Identify the disadvantages of starting a new business.
Purchase price, reluctant partners and obsolete inventory
What start-up and ongoing costs are associated with buying a franchise?
Royalty Payments and Grand Opening Fee
What four things should you do before you sign a contract to buy or join a business?
Seek legal help to finalize ownership an attorney and an accountant
A corporation is a legal entity.
T
A sole proprietor is personally responsible for all business debts
T
Businesses that hire employees must have an employer identification number assigned by the IRS.
T
In a general partnership, all of the partners have unlimited liability.
T
Most franchises have strict rules of operation that must be followed by the franchisee.
T
Royalty Payment
The fee that franchisees must continually pay the franchisor to keep operating the franchise
Capital
The money and other assets owned by a business or person are called
A partnership carries the risk of
Unlimited Liability
Name three disadvantages of being a sole proprietor.
You must raise all the money to start the business yourself, and accept all the risks and education that comes with being a sole
In some states, a DBA license is known as a(n)
fictitious name registration