Types of Businesses Study Guide/Review

What is liability in business terms?

• The profit a company makes

• The legal responsibility for actions, debts, and obligations

• The amount of taxes owed

• A company’s reputation

Which of the following business structures has unlimited liability?

• Corporation

• Sole Proprietorship

• Limited Liability Company (LLC)

• S Corporation

What is a key advantage of a sole proprietorship?

• Limited liability

• Shared decision-making

• Easy to start and minimal legal requirements

• Large capital investment required

What is the biggest disadvantage of a sole proprietorship?

• Limited liability

• Difficulty in making business decisions

• Unlimited personal liability

• High tax rates

A partnership is a business owned by:

• One person

• Two or more people

• A corporation

• The government

Which type of partnership gives all partners decision-making power and unlimited liability?

• General Partnership

• Limited Partnership

• Limited Liability Partnership (LLP)

• Public Partnership

What is a major advantage of a Limited Partnership (LP)?

• All partners share equal liability

• Some partners have limited liability

• It is easier to raise capital

• It requires no legal documentation

Which business structure is often chosen by law firms and medical offices?

• Sole Proprietorship

• Limited Partnership (LP)

• Limited Liability Partnership (LLP)

• C Corporation

What does an LLC combine?

• The characteristics of a corporation and a government agency

• The characteristics of a sole proprietorship and a corporation

• The liability of a partnership and a nonprofit

• A personal bank account with business operations

What document is filed to legally establish a corporation?

• Certificate of Operation

• Articles of Incorporation

• Corporate License

• Business Ownership Contract