Starting Your Own Business Flashcard

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What is Multi-Level Marketing (MLM)?

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A business model where the owner sells products and recruits others to sell products, earning commissions on their sales.

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What is a Sole Proprietorship?

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A type of business owned and operated by one individual, where the owner is personally liable for all business debts.

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What is an Employer Identification Number (EIN)?

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A unique number assigned by the IRS to businesses for tax purposes, required to open a business checking account.

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What is a benefit of having a Sole Proprietorship?

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It is easy to set up and manage, allowing the owner full control over the business.

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Why is it not advisable to borrow money for a business on a credit card?

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Credit cards often have high interest rates, which can lead to significant debt and financial strain.

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What is a Franchise?

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A business model where an individual (franchisee) is granted the rights to operate a business under the brand of a larger company (franchisor).

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What is a Corporation?

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A legal entity that is separate from its owners, providing limited liability protection to its shareholders.

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What is a Limited Liability Company (LLC)?

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A business structure that combines the benefits of a corporation and a sole proprietorship, offering limited liability and pass-through taxation.

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What is a Business License?

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A permit issued by the government that allows an individual or company to conduct business legally.

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What is Double Taxation?

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A situation where a corporation's profits are taxed at both the corporate level and again as dividends to shareholders.