Legal Structures and Their Characteristics

The lecture covers the three main types of legal structures for ventures: sole proprietorship, partnership, and corporation. Each type is discussed in terms of its formation, advantages, and disadvantages. Sole proprietorship is easy to form but has limited capital. Partnerships offer shared profits but have unlimited liability. Corporations provide limited liability and ease of capital acquisition but face double taxation. The lecture concludes with a comparison of these structures.

What are the three main types of legal structures discussed in the lecture?

• Sole proprietorship, partnership, and corporate

• Joint venture, trust, and association

• Non-governmental organization, holding groups, and subsidiary

• Limited liability company, cooperative, and franchise

Which of the following is an advantage of a sole proprietorship?

• Double taxation

• Unlimited life

• Ease of formation

• Limited liability

What is a major disadvantage of a sole proprietorship?

• High governmental interference

• Profit sharing with partners

• Complex formation process

• Limited access to capital

In a partnership, what is a key factor that partners need to agree upon?

• Duration of the agreement

• The company's logo design

• The company's stock price

• The CEO's salary

Which of the following is a disadvantage of a partnership?

• No need for agreements

• Difficulty in obtaining large sums of capital

• Limited liability for all partners

• High governmental interference

What defines a corporation in terms of its structure?

• Has no stakeholders

• Owned by a single individual

• Requires no legal formalities

• Authorized by a state to act as a single entity

Which of the following is an advantage of a corporation?

• Unlimited liability for shareholders

• Transfer of ownership through stock sales

• No need for a board of governance

• Limited access to capital

What is a significant disadvantage of a corporation?

• No access to skilled professionals

• Double taxation

• Limited life span

• No governmental regulations

Which aspect is NOT part of the summary comparison of legal structures?

• Method of creation

• Transferability of interest

• Legal position

• Marketing strategy

What is a common feature of both sole proprietorships and partnerships?

• Ease of formation

• Limited liability

• Unlimited life

• Double taxation