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 )