Types of businesses

Types of businesses

by Nina Tunyova

Multiple Choice

If one person sets up and runs the company, he is called

• a partner

• a sole trader

• a corporator

• a freelancer

Multiple Choice

What liability has a sole trader got?

• limited

• unlimited

Multiple Choice

In an unlimited partnership partners are fully liable for all business debts.

• yes

• no

​Limited liability company

• ​separates the owner’s personal and professional assets

• do not pay additional federal income taxes 

• depending on their location, they might be subject to other state taxes

• fall under the category of self-employment, so those taxes fall on them as well

Multiple Choice

What is NOT an advantage of LLC?

• self-employment taxes

• limited liability of owners

• no additional federal taxes

• active ownership

​

• ​a regular corporation

• ​its own entity kept separate from its owners

• ownership is issued in shares of stock

  ​Shareholders who work in the business are paid and taxed as employees, sparing them from self-employment tax

• ​double taxation: on profit and on dividends

Multiple Select

What are advantages of C corporation? (Choose all correct options)

• double taxation

• self-employment tax

• access to capital by issuing stock

• higher start-up costs

​

• ​ avoid the double taxation that hits normal C corporations

• do not pay tax on profit

• ​limited liability

• less than 100 shareholders

• ​ owners must be US citizens

Multiple Select

What is NOT a feature of S corporation? (choose all correct options)

• single taxation

• Large businesses with more than 100 shareholders

• foreign shareholders

• is not possible everywhere