Business Ownership Structures Quiz

What is the maximum number of people who can co-own and operate a close corporation?

• 15

• 10

• 5

• 1

What is a disadvantage of a close corporation?

• Limited liability for members

• Profits are taxed at the individual's personal tax rate

• Easy and inexpensive to set up

• Subject to more regulatory requirements

What is a characteristic of a partnership?

• Members have limited liability for the debts and obligations of the business

• The business is owned and controlled by one person

• Profits are taxed at the corporate tax rate

• The business is managed by a board of directors

What is an advantage of a partnership?

• The owner has complete control over the business

• Easy and inexpensive to set up and operate

• Profits are taxed at the individual's personal tax rate

• Limited liability for shareholders

What is a characteristic of a private company?

• Shares in the business are publicly traded on a stock exchange

• The business is owned and controlled by one person

• The business is co-owned and operated by a limited number of people

• Shares in the business are owned by a limited number of people

What is a disadvantage of a private company?

• Private companies can issue stock options to attract and retain talented employees

• Private companies have limited access to public capital markets

• Private companies have greater access to capital and resources than sole traders

• Limited liability for shareholders

What is a characteristic of a public company?

• Members have limited liability for the debts and obligations of the business

• Shares in the business are owned by a limited number of people

• The business is owned and controlled by one person

• Shares in the business are publicly traded on a stock exchange

What is an advantage of a public company?

• Public companies have greater access to capital than other business structures

• Easy and inexpensive to set up and operate

• The owner has complete control over the business

• Profits are taxed at the individual's personal tax rate

What is a characteristic of a sole trader?

• The business is managed by a board of directors

• The business is co-owned and operated by a limited number of people

• Shares in the business are publicly traded on a stock exchange

• The owner is responsible for all aspects of the business

What is a disadvantage of a sole trader?

• The owner has complete control over the business

• Private companies have greater access to capital and resources than sole traders

• Unlimited personal liability for the owner

• Limited liability for members