Exam 4: Choosing a Form of Business Ownership

Three college graduates want to start an auto shop. Two of the partners will do most of the work, so they plan to share, receiving 40% of the profits each. The remaining partner will get 20% of the profits. Because working with other people's cars can create liabilities, they want to form of business that provides liability protection. Which form of business best fits their needs?

Ramin is interested in starting his own business. He is concerned about how much it will cost to start and maintain this new venture. Which question should Ramin ask himself?

Brothers Marko and Ivan would like to start a landscaping business. They each plan to invest $5000 into the business for equipment and initial advertising and plan to split the profits evenly. This is an example of which of the following?

Which of the following is one of the four key considerations when choosing business ownership structure?

Big Box Corporation has two owners who share the work equally. Andrea owns 80% of the company shares, and Sheryl owns 20% of the company shares. Andrea invested 60% of the money required to start the business. If the company makes $100,000 profit this year and decides to distribute it all to the owners, how much will Andrea get?

Twenty young entrepreneurs decide they want to start a dating service; however, they do not want to be held personally liable for losses of the company. They want to avoid double taxation. Which type of business organization would best fit their needs?

Anja wants to start a business, but she is unsure of the legal form best for her. Short of cash, she has decided to take the form that is the least expensive and most flexible in terms of decision making. She is not worried about liabilities because the business is small and she's personally insured. What type of business best fits Anja's needs?

If Cara, Aubrey, and Liam want to limit liability for their business debts and want to avoid double taxation, which type of business ownership would you recommend?

You and four friends are opening a studio to create new Xbox games. You hope to raise $500,000 early on by selling equity in the business. You'll then reinvest profits back into the business to drive growth and minimize taxes. Within five years, you hope to sell the majority of the business to an angel investor or venture capital firm. Which form of business best fits your needs?

Which of the following is a voluntary association of two or more people acting as co-owners of a business?

Karen loves to cook and receives unqualified praise whenever she prepares a meal for someone. Encouraged by these compliments and eager to put her culinary talents to good use, Karen decides to open a small neighbourhood restaurant. Because she plans to maintain complete ownership and control of the business, she will most likely organize it as which of the following?

Doctors, lawyers, accountants, and tradespeople like plumbers and electricians often set themselves up as what form of business?

Which of the following is necessary for starting a sole proprietorship?

You invested $80,000 into a consulting partnership and have a 50% stake in the business. Your partner didn't invest anything, but brings management expertise to the business. After a year, the business racks up $100,000 in debts and must close down. Based on this information, what is the total personal loss for you and your partner in the business?

Isla is starting a medical consulting business that she'll own and operate by herself. She wants to ensure that making decisions about the business will be fast and easy. Which form of business should she most likely choose?