Exam 28: Types of Business Organizations

Generally, in dealing with a limited liability company (LLC) formed in another state, a state will apply the law of the state where the LLC was formed.

Rita and Sal do business as Tech Security, a partnership. In most states, for the purposes of collecting judgments and having accounting performed, this firm would be treated as

Able Accounting, LLC, is a limited liability company. With respect to the firm's management, Able's members can

The proprietor of a sole proprietorship does not bear the burden of all liabilities incurred by the business.

Anyone who does business without creating a separate business organization has a partnership.

Cathy, Don, and Ethel do business as Fertile Farm. Cathy gives notice to quit the firm, which otherwise continues to do business. This is

The liability of the members of a limited liability company for the firms' debts and obligations is unlimited.

Omar is a partner in Party Caterers. Omar's death will

One of the essential elements of a general partnership is a joint ownership of the business.

Len is a member of Maintenance Service, a limited liability company. The firm's profits are "passed through" to Len and the other members who pay

Housing Development, LP, is a limited partnership that invests in residential real estate projects. Its limited partners include more than 150 sophisticated investors and investment professionals. A limited partner risks losing his or her limited liability if he or she

Kay and Linda decide to do business as Marketing & Promotion. To be a partnership, this association can result from an agreement that is

It is often more difficult and costly to start a sole proprietorship because so many legal forms are involved.

The proprietor's opportunity to raise capital for a sole proprietorship is limited.

Chase, the owner of Data Master, a sole proprietorship, wants to obtain additional business capital. This opportunity is most likely limited to

Selections, a general partnership, operates a gift shop. Selections has five partners. Tony has a one-third interest in the partnership. Each of the other partners has a one-sixth interest. With respect to management decisions

When the owner of a sole proprietorship dies, the business does not dissolve-it is automatically transferred to family members or other heirs.

Dana is a member of Earthground Coffee, LLC, a limited liability company. Dana is liable for Earthground's debts

The proprietor pays only personal income taxes on a sole proprietorship's profits.

Fact Pattern 28-2 Kristin and Lindsey are partners in Mobile Devise, a marketing firm. Refer to Fact Pattern 28-2. Kristin signs a contract with Nature's Chocolate, a candy maker, apparently on Mobile's behalf. The contract is binding on