Section 8 Study Questions (15.0 points)
Answer each question fully. Complete sentences are not necessary.
Lesson 1 (3.0 points)
1. What is liability, and what does it mean to have personal liability for a company? (0.5 points)
Liability is the authorized word for being alleged responsible as well as compelled to complete a commitment. If you attain a personal liability for a company, this means that you can be held personally responsible for your company; including financial obligation as well as illegal actions your company may perform.
2. What are taxes, and what is the IRS? (0.5 points)
A tax is a financial obligation that is mandatory by law for an individual to pay. The IRS is the Internal Revenue Service, where all taxes are gathered by a government organization.
3. What is a pass-through entity? (0.5 points)
Some business structures are taxed by the way of pass-through entities. These businesses are not taxed as an individual entity.
4. What are the four main legal structures for a business in the United States? (0.5 points)
Limited Liability Company (LLC)
5. Which of those structures protect your personal liability? (0.5 points)
Corporations, being the main one, but also LLC structures could possibly protect your personal liability.
6. Which of those structures offer pass-through taxation? (0.5 points)
Sole proprietorships & partnerships offer pass-through taxation.
Lesson 2 (3.0 points)
1. What is a C corporation? (0.5 points)
C Corporation is the typical kind of corporation; it shields the liability of its proprietors, but obtains double taxation.
2. What is an S corporation, and how is it different from a C corporation? (0.5 points)
S Corporation is a corporation that attains specific tax status and not all companies can attain this status. This tax status is the largest difference between S Corporations and C Corporations.
3. What is a nonprofit corporation, and how is it different from a C corporation? (1.0 points)
A nonprofit corporation is additionally known as a “tax exempt corporation”. This form of corporation does not have to pay federal taxes, and may not even have to pay state or local ones either. Again, not all companies can attain this status, and a nonprofit corporation, just as its name states, does not have an objective of making a profit. Here, there is a very limited amount of tax being paid, whereas in a C corporation, double tax is paid!
4. What is franchising, and how does it work? (1.0 points)
Franchising is transforming a company into a parent company including littler retail outlets preserved by self-sufficient operators. This means functions by the franchisee disbursing a primary payment as well as recurrent money to the franchiser, and in response, is allowed to use almost everything the franchisor came up with!
Lesson 3 (3.0 points)
1. What is a DBA name, and when does a company need one? (1.0 points)
A DBA name is a company’s business name, i.e., trade name or brand name. A DBA name is needed when structures such as partnerships or sole proprietorships want to utilize a company’s name that does not consist of the proprietor’s last name.
2. What is a trademark, and why might you register one? (1.0 points)
A trademark is a shielded trade or brand name for a business, product, or service. A trademark assists in distinguishing a business, product, or service, from additional businesses, products, or services. To safeguard your company’s name, with the intention of making sure that additional companies do not copy and confuse or misinform customers, you can enlist the name as a trademark.
3. What are the five steps in registering a trademark? (0.5 points)
Selecting an appropriate name.
Investigate the name.
Enlist it with the state.
Enlist it with the USPTO.
Claim your trademark....
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