Quiz 5

1/ Scenario: An entrepreneur wishes to start a non-profit company to promote environmental conservation.

Question: Which organisational structure would best suit this purpose?*

• • S Corporation

• • Limited Liability Partnership

• • Cooperative

• • Nonprofit Corporation

2/ Scenario: A tech startup is considering registering as an S Corporation to avoid high taxes but has a few foreign investors.

Question: What restriction could affect this decision?*

• • S Corporations are required to pay double taxation

• • S Corporations cannot generate over 30% income from passive sources.

• • Only domestic individuals can be shareholders in an S Corporation.

• • S Corporations cannot have more than 10 shareholders.

3/ Scenario: Michael and Sam are considering a partnership for their startup but are concerned about legal exposure. Sam suggests forming a limited partnership.

Question: What is a key benefit of choosing a limited partnership?*

• • Both partners are protected from all liabilities.

• • Michael would have limited liability if he is a limited partner.

• • Both partners will equally share the profits regardless of their roles.

• • Sam and Michael can avoid taxes completely.

4/ Scenario: Emma is forming a cooperative with local farmers to improve bargaining power for seeds and equipment.

Question: What is a primary characteristic of cooperatives that benefits Emma and other members?*

• • Members receive double taxation.

• • Members gain shares in the open stock market.

• • Members equally share decision-making control.

• • Members hold limited liability.

5/ Scenario: A multinational corporation with offices in the U.S. and abroad faces double taxation in some regions.

Question: Which business form might help reduce this burden?

• • Master Limited Partnership

• • Sole Proprietorship

• • Cooperative

• • S Corporation

6/ Scenario: A U.S.-based company is creating a franchise in Canada.

Question: Which global franchising advantage might be most relevant?*

• • Freedom from regulatory restrictions

• • Ability to enter new markets easily

• • Lower start-up costs

• • Increased control over franchisee decisions

7/ Scenario: A corporation wishes to avoid U.S. corporate income tax and operate more like a partnership.

Question: Which business form should they consider?

• • S Corporation

• • Master Limited Partnership

• • Public Corporation

• • LLC

8/ Scenario: Julia wants to start a business with minimal setup costs and simple management. She prefers to retain all profits and avoid paying extra taxes.

Question: Which business structure best fits Julia’s requirements?*

• • Partnership

• • Sole Proprietorship

• • Limited Liability Company (LLC)

• • Corporation

9/ Scenario: A partnership is seeking protection for personal assets but wants to avoid corporate taxes.

Question: Which partnership type best meets these requirements?

• • Limited Liability Partnership

• • Master Limited Partnership

• • Limited Partnership

• • General Partnership

10/ Scenario: A franchise owner notices that their sales have declined due to the franchisor’s new online store.

Question: What option might the franchisee seek in this situation?*

• • Change franchise territory to another location

• • Sue the franchisor for damages

• • Receive “reverse royalties” for lost in-store sales

• • Request a buyout of the franchise