Types of Ownership

1. What type of business is owned and run by one person?

• a) Sole proprietorship

• b) Partnership

• c) Corporation

• d) Franchise

1. In what type of business are profits shared among multiple owners?

• Sole proprietorship

• Partnership

• Corporation

• Hybrid

1. What is an advantage of a sole proprietorship?

• a) Shared financial commitment

• b) Limited personal liability

• c) Less complex taxes

• d) Complementary partner skills

1. What is a disadvantage of a sole proprietorship?

• a) Difficulty raising capital

• b) Additional paperwork

• c) Double taxation

• d) Complex legal requirements

1. An advantage of a corporation is:

• a) Direct managerial control

• b) Personal liability protection for shareholders

• c) Pass-through taxation

• d) Minimal legal paperwork

1. A disadvantage of a C corporation is:

• a) Restriction on ownership transfer

• b) High costs and legal complexity

• c) Unlimited liability for shareholders

• d) Lack of access to capital

1. What does it mean for a corporation to have "personhood"?

• a) It can enter into contracts

• b) It elects a CEO

• c) It receives a salary

• d) It provides health insurance

1. Benjamin is starting a low-cost business on his own. What legal structure should he consider?

 

• a) Sole proprietorship

• b) Partnership

• c) Corporation

• d) Non-profit

1. Which legal structure has the MOST complex legal and tax requirements?

• a) Sole proprietorship

• b) Partnership

• c) C Corporation

• d) Limited liability company

1. Why might a small consulting firm choose a partnership structure?

• a) To limit liability for partners

• b) To access more start-up capital through sale of stock

• c) To minimize complex legal paperwork requirements

• d) To utilize complementary expertise of partners