1. What is a limited liability company? Explain the advantages and disadvantages of this type of business ownership?
2. Compare and contrast the following forms of business organization: sole proprietorship, general partnership, limited partnership, limited liability company, and corporation as to ease of formation, liability of owners, management, and tax implications.
3. 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?
4. What is a corporation? Explain the advantages and disadvantages of this type of business ownership? Also, briefly discuss the limitations on a corporation electing Subchapter "S" status.
5. Jack and Jill were living together. Jack wanted to start a small retail store, but did not have good credit. Jill, whose credit was excellent, signed loan agreements with Jack so he could borrow the money to start the business. Jack used business cards that stated he was the "owner" of the business. He and Jill filed separate tax returns. Jack stated he was self-employed and claimed the business was a sole proprietorship. The money that was earned from the store was placed into a joint checking account owned and used by Jack and Jill. When there were significant decisions to be made about the business, such as deciding to franchise the business, the decision was made jointly by Jack and Jill.
Five years after the business was started, Jill left Jack. She claimed she was entitled to one-half the business's profits since she and Jack were