Ch 6

Patricia and Yon started a coffee shop together. Patricia is in charge of managing food prep and marketing while Yon manages coffee roasting and hiring. They try to split up all other tasks evenly. Patricia and Yon have most likely formed what kind of business?

• A limited liability company

• A sole proprietorship

• A general partnership

• A C corporation

Annmarie started making earrings as a hobby, and she would give them to friends and family as gifts. Some of her friends started requesting more jewelry and even offered to pay Annmarie for her work. This prompted her to set up a website where she could sell her jewelry to a wider audience. Although she is just getting started, Annmarie believes that she can grow the business by investing more of her time into marketing her products and coming up with new designs. Annmarie has not filed any articles of incorporation. What kind of business has Annmarie formed?

• A limited liability company

• A sole proprietorship

• A general partnership

• A C corporation

Siti is the CEO of a tech company in California. She is planning a new product launch, and she will need to hire a few new developers and engineers to get the product ready. She raised money for her company by issuing common stock on the New York Stock Exchange (NYSE). What kind of business is Siti running?

• A sole proprietorship

• A limited liability partnership (LLP)

• A general partnership

• A C corporation

Ahmad is a sole proprietor. When he decided to start selling his handmade greeting cards, he set up a website and started advertising his business, Daily Smiles, through social media. He did not have to file any special paperwork with the government or pay special fees to make Daily Smiles an official business. Which benefit of sole proprietorship does this describe?

• Retention of profit

• 
  Ease of formation

• Retention of control

• Possible tax advantage

When Jessica took out a loan to finance her coffee delivery service, she hoped that she would earn enough revenue to repay the loan and interest within the first five years of operation. Unfortunately, she had to abandon the business after just three years. Despite her business no longer being in operation, Jessica was still responsible for the remaining balance of the loan, which she had to pay back using her personal funds. This situation was the result of the ________ Jessica faced when starting a sole proprietorship.

• limited ability to attract and retain talent

• unlimited liability

• heavy workload

• lack of permanence

Lara and Armando have pooled their money to open a high-end hair salon in Manhattan, New York. Lara is an experienced stylist who is responsible for the overall operations of the salon, while Armando is an investor who does not actively participate in managing any part of the business. If the business were to fail, Lara would be personally liable for the business’ debts. Armando, however, would not assume any personal liability. This is because they have formed a __________.

• limited partnership

• general partnership

• sole proprietorship

• C corporation