Understanding Business Structures

What is the primary reason to consult an accountant when unsure about choosing a business structure?

• To register the business name

• To receive personalized business advice

• To file business taxes

• To understand tax implications

Which type of business structure is typically easiest to form?

• Partnership

• Sole proprietorship

• LLC

• Corporation

What major disadvantage do informal business structures have?

• Complex paperwork

• High tax rates

• Difficulty in obtaining investment

• Lack of asset protection

What is a significant risk associated with informal business structures?

• High initial costs

• Complicated tax filing

• Limited business credit

• Personal asset risk

What is a key benefit of forming an LLC?

• Double taxation

• High complexity

• Limited growth potential

• Pass-through taxation

What should a business consider before choosing to be taxed as a C-Corp?

• Potential for rapid growth

• Desire to reinvest substantial profits

• Preference for minimal paperwork

• Need for simple tax filing

Which business structure is recommended for a small business starting out?

• Corporation

• Sole proprietorship

• LLC

• Partnership

Unlimited liability holds a sole proprietor personally responsible for all the debts of the business.

• True

• False

What type of company is a mix of a partnership and a corporation?

• S corporation
• a hedge fund
• Limited Liability Company
• charity

Which type of business entity provides its owners with limited liability?

• Sole Proprietorship

• Partnership

• Corporation

• Cooperative