IntroToBusinessQuestions
Chapter 6
1) Describe the basic features that distinguish the four basic forms of business ownership sole proprietorships, general partnerships, C corporations, and limited liability companies.
=Sole proprietorships- owned by one person plus earnings and debts are the owner’s income and debt.
=Partnerships- Two or more owners that take a voluntary agreement.
=Corporations- a business entity created by filling a form.
2) Why do many entrepreneurs initially set up their businesses as sole proprietorships? Why do many successful entrepreneurs eventually decide to convert their sole proprietorship to some other form of ownership such as a corporation or LLC?
=Because sole proprietorship owners can establish a sole proprietorship instantly, easily and inexpensively. They carry little ongoing formalities. Thirdly they don’t need to pay unemployment tax on him/herself. Lastly owners may freely mix business and personal assets
3) How do limited partnerships and limited liability partnerships differ from general partnerships and from each other?
=Limited partnerships and limited liability partnerships offer some of their owners limited personal liability for business debts, unlike general partnerships. Limited partnership is a partnership that consists of at least one general partner. A limited liability partnership doesn’t have a general partner.
4) What advantages help explain why virtually all large companies are organized as C corporations?
= C corporations are able to have unlimited shareholders, which is probably an important characteristic to large companies.
5) What steps are involved in forming a C corporation?
-Choose legal name for your business
- draft and file articles of incorporations with the secretary of state
- Issue stock certificates to the initial storeholders once you receive notice from the secretary of state that your articles of incorporation have been accepted and filed
- Apple for business license and other permits specific to your industry. If
1) Describe the basic features that distinguish the four basic forms of business ownership sole proprietorships, general partnerships, C corporations, and limited liability companies.
=Sole proprietorships- owned by one person plus earnings and debts are the owner’s income and debt.
=Partnerships- Two or more owners that take a voluntary agreement.
=Corporations- a business entity created by filling a form.
2) Why do many entrepreneurs initially set up their businesses as sole proprietorships? Why do many successful entrepreneurs eventually decide to convert their sole proprietorship to some other form of ownership such as a corporation or LLC?
=Because sole proprietorship owners can establish a sole proprietorship instantly, easily and inexpensively. They carry little ongoing formalities. Thirdly they don’t need to pay unemployment tax on him/herself. Lastly owners may freely mix business and personal assets
3) How do limited partnerships and limited liability partnerships differ from general partnerships and from each other?
=Limited partnerships and limited liability partnerships offer some of their owners limited personal liability for business debts, unlike general partnerships. Limited partnership is a partnership that consists of at least one general partner. A limited liability partnership doesn’t have a general partner.
4) What advantages help explain why virtually all large companies are organized as C corporations?
= C corporations are able to have unlimited shareholders, which is probably an important characteristic to large companies.
5) What steps are involved in forming a C corporation?
-Choose legal name for your business
- draft and file articles of incorporations with the secretary of state
- Issue stock certificates to the initial storeholders once you receive notice from the secretary of state that your articles of incorporation have been accepted and filed
- Apple for business license and other permits specific to your industry. If