Business Structure Quiz

What is the main advantage of a sole proprietorship?

• Separate tax filings

• Ability to raise funds easily

• Lower tax rates

• Limited liability

In a partnership, who is personally liable for the full amount of a debt?

• Board of directors

• Shareholders

• General partner

• Limited partner

What is the main advantage of incorporating a business?

• Limited liability

• Lower start-up costs

• Higher personal tax rates

• Ability to deduct all expenses

What is the tax implication of a sole proprietorship?

• No separate corporate tax return required

• Access to personal tax credits

• Ability to save on taxes via income splitting

• Taxable income subject to individual personal tax rates

What is the tax implication of a partnership?

• No limits to what expenses can be deducted

• Tax return for the general partnership is not required

• Taxable income is subject to individual personal tax rates

• Corporate tax rates are lower than personal tax rate

What is the tax implication of a corporation?

• Access to personal tax credits

• Ability to save on taxes via income splitting

• Taxable income subject to individual personal tax rates

• Double taxation

What is the main disadvantage of a sole proprietorship?

• Lower tax rates

• Limited liability

• Limited ability to raise money

• Separate tax filings

What is the main disadvantage of a partnership?

• Higher start-up costs

• Limited liability

• Potential for disagreements and dishonesty

• Ability to deduct all expenses

What is the main disadvantage of a corporation?

• Lower personal tax rates

• Independent management

• Access to personal tax credits

• Lower start-up costs

What is the purpose of strategic planning in a business?

• To increase personal liability

• To provide clear direction and allocate resources

• To limit employee engagement

• To reduce financial performance