Exam 13: Choosing the Legal Form of Organization

A study done by the Small Business Administration (SBA) Office of Advocacy in 2011 found that _____ firms changed their legal form in the first four years of their existence.

Common stockholders are entitled to vote at stockholders' meetings.

Limited liability companies (LLCs) do not permit foreign ownership by nonlegal residents.

Describe the two types of partnerships.

A(n) _____ is chartered in a state other than in the one in which it will do business.

A DBA (doing business as) certificate is sometimes referred to as a(n)

Each business partner owns and has use of the property acquired by the partnership, unless otherwise stated in

Under the Internal Revenue Code, a limited liability company (LLC) exhibits all four characteristics of a corporation. Which of the following is NOT one of the four characteristics?

Which of the following is NOT an advantage of a sole proprietorship?

In a(n) _____, all partners assume unlimited personal liability and responsibility for management of the business.

The law mandates a partnership to draw up a written partnership agreement, based on the Uniform Partnership Act, which spells out business responsibilities, profit sharing, and transfer of interest.

In terms of its treatment of income, expenses, and taxes, a general partnership is essentially a sole proprietorship consisting of more than one person so each partner pays taxes and receives income based on their proportionate interest in the partnership.

What questions should an entrepreneur ask him- or herself when deciding what type of legal form to choose for his or her venture?

In forming a(n) _____, the entrepreneur gives up proprietary interest in the corporation and dedicates all the assets and resources of the corporation to tax-exempt activities.

What are the added advantages of a partnership over a sole proprietorship?

What are the advantages of a C-corporation?

The _____ is the most commonly chosen legal structure for a growing company that seeks outside capital in the form of equity or debt.

What are the advantages of a sole proprietorship?

What are the two hurdles an entrepreneur must overcome to operate as a nonprofit corporation and enjoy tax-exempt status?

Which of the following is an advantage of C-corporations?