Chat with AIExam 21: Starting a Business: Llcs and Other Option
Compare and contrast the following forms of business organization: sole proprietorship,general partnership,limited partnership,limited liability company,and corporation as to ease of formation,liability of owners,management,and tax implications.
(30) 
VerifiedA sole proprietorship is an unincorporated business owned by one person.It is easy and inexpensive to create and operate.However,the owner has unlimited personal liability for the debts of the business.The owner has the right to manage the business.Business income is taxed on the owner's personal income tax return; the company does not have to file a separate tax return.A general partnership is an association of two or more co-owners to operate a business for profit.Partnerships are easy to form and do not require filings with the government,although a written partnership agreement for use between the parties is recommended.A disadvantage of general partnerships is the unlimited liability of partners.Partners have joint and several liability for partnership debts.Unless otherwise agreed,partners have equal rights to manage the business.A partnership does not pay taxes itself; all income and losses are passed through to the partners and reported on their personal income tax returns.Limited partnerships have at least one general partner,who has unlimited liability but the right to manage,and at least one limited partner,who has limited financial liability but few management rights.A limited partnership must file a certificate of limited partnership with its Secretary of State,so formation is not as easy as for sole proprietorships or general partnerships.Limited partnerships,like general partnerships,are not taxable entities.Limited liability companies generally require two documents: a charter and an operating agreement.The charter must be filed with the Secretary of State.The operating agreement sets out the rights and obligations of the owners/members.All members have limited liability,and the business has the tax status of a partnership.Corporations are relatively expensive and difficult to form,but owners have limited liability.Generally,the owners/shareholders are not involved in the management of the company.Corporations are taxable entities,so they must pay taxes and file returns.The owners/shareholders must also pay tax on dividends they receive from corporations.
Charles and Ellen,an unmarried couple,run an ice cream store.The business is not incorporated and they have filed no formation papers with the state.Their business is a:
(36) VerifiedB
At what stage are the partnership debts paid and the proceeds distributed to the partners?
(39) VerifiedB
Alan,a dentist,and his wife Martha,an attorney,can protect their personal assets with limited liability from their business dealings by creating and operating a professional corporation together.
(28) The form of business ownership that is the most easily transferable is the:
(40) To form an LLC,a charter but not an operating agreement must be filed with the Secretary of State in the jurisdiction where the business will operate.
(43) Debra and Lawrence have an equal partnership.This year,after expenses,the partnership had a profit of $200,000.Debra and Lawrence will each pay taxes on:
(38) Under the Uniform Limited Partnership Act a limited liability limited partnership may be formed.
(37) The business form that is taxed as a partnership and gives all owners limited liability,is:
(28) In order to obtain limited liability,Tom and Doris formed an LLC to operate their catering business.They sometimes deposited the proceeds from catering jobs into their personal checking accounts and if they needed to pay personal bills and were short of funds,they used the business account.If creditors of the business cannot get payment for their invoices,is there anything a court can do to help the creditors?
(34) Daniel,his parents,and three brothers own all the stock of their family farm corporation.This corporation,which is taxed as a corporation,is probably:
(28) Andy wants to start his own business.He has decided to rent space in a "strip mall" and open a pet shop.Additionally,he will provide dog grooming services.He figures he can do almost everything himself,though he will need to hire a part-time employee on an "as needed" basis.His friend,Lacy,has agreed to work when needed.
Andy is considering operating his business as a sole proprietorship.What are the primary legal advantages and disadvantages to this form of business ownership for Andy's pet shop?
(36) Corporations have a distinct advantage over other forms of business organization in the area of taxation.
(35) E.I.James is a writer with a best selling novel.He wishes to create a corporation called "James,Inc." He will be the only shareholder.Can James incorporate his business of writing?
(28) A limited liability company,unlike a Subchapter S corporation,can have members that are corporations,partnerships,or nonresident aliens.
(34) Which of the following would not be personally liable for the debts of the business?
(29) To be a close corporation,the business must not have publicly traded stock.
(37) 
Filters
- Essay(0)
- Multiple Choice(0)
- Short Answer(0)
- True False(0)
- Matching(0)