#2 Business Ownership

What is a corporation?

• A legal entity that is separate from its owners

• A business structure that protects its owners from being personally liable for the company’s debts or liabilities

• A corporation that operates to accomplish a special mission other than to make a profit

• A parent company that sells the right to open stores and sell products or services using its brand, expertise, and intellectual property

Noah, Evelyn, and Lily are planning to start a corporation. What would be an advantage for them in doing so?

• Personal liability protection

• Strict guidelines and protocols to follow

• Double taxation

• Regulation

Harper, Aiden, and Emma are planning to start a corporation. What could be a potential disadvantage of their decision?

• It could be costly – corporations are often the most expensive business structure to set up

• They could ensure business security and continuity

• They could attract more investors, thus making it easier to obtain capital

• The corporation, not Harper, Aiden, or Emma individually, would be taxed on profits

What is an LLC?

• A legal entity that is separate from its owners

• A business structure that protects its owners from being personally liable for the company’s debts or liabilities

• A corporation that operates to accomplish a special mission other than to make a profit

• A parent company that sells the right to open stores and sell products or services using its brand, expertise, and intellectual property

What is a non-profit corporation?

• A legal entity that is separate from its owners

• A business structure that protects its owners from being personally liable for the company’s debts or liabilities

• A corporation that operates to accomplish a special mission other than to make a profit

• A parent company that sells the right to open stores and sell products or services using its brand, expertise, and intellectual property

What is a benefit of a corporation?

• Difficult to set up and manage

• Can attract more investors, thus easier to obtain capital

• Business security and continuity is compromised

• The individual owners are taxed on profits, not the corporation

What is the main disadvantage of a corporation?

• Personal liability protection

• Double taxation

• Flexibility in decision making

• Easy to set up

What is the primary purpose of a corporation?

• To make a profit for its shareholders

• To protect its owners from being personally liable for the company’s debts or liabilities

• To accomplish a special mission other than to make a profit

• To sell the right to open stores and sell products or services using its brand, expertise, and intellectual property

What is a franchise?

• A legal entity that is separate from its owners

• A business structure that protects its owners from being personally liable for the company’s debts or liabilities

• A corporation that operates to accomplish a special mission other than to make a profit

• A parent company that sells the right to open stores and sell products or services using its brand, expertise, and intellectual property

What is a sole proprietorship?

• A legal entity that is separate from its owners

• A business structure where the owner is personally liable for the company’s debts or liabilities

• A corporation that operates to accomplish a special mission other than to make a profit

• A parent company that sells the right to open stores and sell products or services using its brand, expertise, and intellectual property