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Which of the following individuals would benefit most from an LLC?
A.)
Sheri is one of the founders of what is expected to be a large business operation. When
it comes to choosing a form of business organization, she values limited liability, but she
also wants a board of directors who can make major decisions.
B.)
Jen has a thriving business that she envisions taking public within a year. She is eager
to begin selling stock and raising more funds that she can reinvest in her company.
C.)
Colin wants to start a business with five of his friends, but they want their business to be
a separate entity that protects them from personal liability. They also do not want to deal
with burdensome obligations like annual meetings. ( correct )
D.)
Dave has a great idea for a business, but he hopes that once it gets up and running, he
can be a "silent" partner and not have to participate in any day-to-day management.
Why is incorporation an attractive form of business organization for many new
companies?
A.)
Because there are very few laws that govern corporations
B.)
Because it is less burdensome to manage than a sole proprietorship or a partnership
C.)
Because it allows parties to invest in the company without taking on significant risk (
correct )
D.)
Because of the tax advantages that it confers
Which of the following describes a general partnership?
A.)
An agreement between two or more persons to operate a business and share profits and
losses ( correct )
B.)
A business with a single owner who is fully liable for all debts
C.)
An agreement between two separate businesses to form a new business with a single
owner
D.)
An agreement between two or more persons to operate a business, but in which one
partner's losses are limited to what he or she initially invested
Which of the following is a consideration when choosing a form of business
organization?
A.)
Whether or not the business has any competitors
B.)
How long the business has been in operation
C.)
Whether a business produces a good or a service
D.)
The level of legal complexity the founder of a business is willing to take on ( correct )
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