Exam 31: Starting a Business: LLCs and Other Options

What federal agency requires that the seller of a franchise give the potential buyer Franchise Disclosure Document (FDD)and audited financial statements?

Briefly discuss the the major restrictions placed on an "S" corporation.

If partners wish to maintain having protection against personal liability,it is essential to comply with all the technicalities of a limited liability partnership statute.

What constitutes a social enterprise's "triple bottom line"?

All the business forms listed below have limited liability EXCEPT the

Social enterprises are organizations that pledge to behave in a socially responsible manner,even as they pursue profits.

The form of business ownership that is the MOST easily transferable is the

Which of the following statements regarding social enterprises is TRUE?

A partnership is a taxable entity,separate from the partners.

Alan,a dentist,and his wife Martha,an attorney,can protect their personal assets with limited liability from their business dealings by creating and operating a professional corporation together.

To be a close corporation,the business must be small,with no more than 20 owners and no more than $500,000 in gross annual income.

Andy wants to start his own business.He has decided to rent space in a "strip mall" and open a pet shop.Additionally,he will provide dog grooming services.He figures he can do almost everything himself,though he will need to hire a part-time employee on an "as needed" basis.His friend,Lacy,has agreed to work when needed. Andy is considering operating his business as a sole proprietorship.What are the primary legal advantages and disadvantages to this form of business ownership for Andy's pet shop?

Limited liability is a major advantage of a partnership as compared to a corporation.

In order to obtain limited liability,Tom and Doris formed an LLC to operate their catering business.They sometimes deposited the proceeds from catering jobs into their personal checking accounts and if they needed to pay personal bills and were short of funds,they used the business account.If creditors of the business cannot get payment for their invoices,is there anything a court can do to help the creditors?

Harold and Zack have pooled their money together to buy real estate but have filed no formal papers to form a business.Harold,a lawyer,handles all the legal matters and Zack,a real estate broker,finds buyers for the property they have subdivided.Harold and Zack are engaged in a

Franchise fees can be costly,but they are usually payable over a number of years,after profits are generated from the business.

To form an LLC,both a charter and an operating agreement must be filed with the Secretary of State in the jurisdiction where the business will operate.

Trudy wishes to buy a national franchise.What information is the seller legally required to provide before she buys the franchise?

Charles and Ellen,an unmarried couple,run an ice cream store.The business is not incorporated and they have filed no formation papers with the state.Their business is a

James was a partner in a large firm.He died unexpectedly.His son,Frank,wanted to take over for his father in the partnership and was well qualified to do the work his father had done.Which statement best describes Frank's rights in the partnership if he inherits the interest?