Exam 31: Starting a Business: Llcs and Other Options

An organization that does not pay income tax on its profits but passes it through to its owners who pay the tax at their individual rates is called a

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.

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.

Most franchisors and franchisees are

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

The most common form of business ownership is the corporation.

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

Which is true of an S corporation?

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

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

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.

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

In order to obtain limited liability,Tom and Doris formed an LLC to operate their catering business.They sometimes deposit the proceeds from catering jobs into their personal checking accounts,and if they need to pay personal bills and are short of funds,they use 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?

Corporations have perpetual existence.

All of the following are characteristics of a closely held corporation EXCEPT

Corporations have a distinct advantage over other forms of business organization in the area of taxation.

Jill owns a retail business by herself and was sued by a customer who fell in the store.The customer claimed the business was negligent in caring for its floors.Which statement best describes Jill's potential liability?

Debra wanted to form a partnership with Lawrence.He agreed and they became co-owners in an equal partnership.This year,after expenses,the partnership had a profit of $200,000.How will the taxation of this profit be handled?

The corporate form of business

Daniel,his parents,and three brothers own all the stock of their family farm corporation,and each person takes an active role in managing the enterprise.This corporation,which is taxed as a corporation,is most likely a(n)