Business Ownership Types Quiz

Which of the following is a defining characteristic of a sole proprietorship?

• Owned by shareholders

• Owned and operated by one individual

• Requires a board of directors

• Must be registered as a non-profit

What is the main purpose of a non-profit corporation?

• To maximize profits for owners

• To serve a public or charitable cause

• To avoid paying any taxes

• To provide unlimited liability to owners

Which business structure provides limited liability to its owners and is taxed as a pass-through entity?

• Sole proprietorship

• Limited Liability Company (LLC)

• C-Corporation

• Partnership

In a partnership, what is the term for a partner who is only liable up to the amount they invested?

• General partner

• Limited partner

• Managing partner

• Silent partner

Which type of corporation is subject to double taxation?

• S-Corporation

• C-Corporation

• Sole Proprietorship

• LLC

Which of the following is an advantage of forming an LLC?

• Unlimited liability for owners

• Pass-through taxation

• Required to distribute all profits to shareholders

• Must be operated by a single individual

Which business type allows profits to be distributed to shareholders without being taxed at the corporate level?

• S-Corporation

• C-Corporation

• Non-Profit Corporation

• Sole Proprietorship

Which of the following is a disadvantage of a sole proprietorship?

• Complex to set up

• Unlimited personal liability

• Double taxation

• Requires a board of directors

Which type of business ownership is most likely to have bylaws and a board of directors?

• Sole Proprietorship

• Partnership

• C-Corporation

• LLC

Which of the following best describes a general partnership?

• All partners have limited liability

• All partners share management and liability

• Only one partner manages the business

• Partners are not responsible for business debts