Podcast
Questions and Answers
What is the main advantage of a sole proprietorship?
What is the main advantage of a sole proprietorship?
- Easier to obtain financial resources
- Unlimited liability protection
- Flexibility in running the business (correct)
- Longer business lifespan
Which of the following is NOT a characteristic of a sole proprietorship?
Which of the following is NOT a characteristic of a sole proprietorship?
- Few requirements for starting the business
- Profits are taxed only once
- Separate legal entity from the owner (correct)
- Limited managerial skills
What is the main disadvantage of a sole proprietorship?
What is the main disadvantage of a sole proprietorship?
- Lack of privacy
- Unlimited liability protection
- Difficulty in obtaining financial resources (correct)
- Complicated tax structure
In a partnership, how are the business and its owners viewed by the law?
In a partnership, how are the business and its owners viewed by the law?
Which of the following is NOT a common example of a sole proprietorship?
Which of the following is NOT a common example of a sole proprietorship?
What is the primary factor that determines the business organization form a company will choose?
What is the primary factor that determines the business organization form a company will choose?
What type of business structure is a corporation?
What type of business structure is a corporation?
What is a key advantage of a corporation?
What is a key advantage of a corporation?
What is a key disadvantage of a corporation?
What is a key disadvantage of a corporation?
What is a key feature of a Limited Liability Company (LLC)?
What is a key feature of a Limited Liability Company (LLC)?
What is a key advantage of an LLC?
What is a key advantage of an LLC?
What is a key disadvantage of an LLC?
What is a key disadvantage of an LLC?
What is the most significant pro of working in a start-up company according to the text?
What is the most significant pro of working in a start-up company according to the text?
Which of the following is identified as a con of working in a start-up company?
Which of the following is identified as a con of working in a start-up company?
What is the likelihood of a start-up company failing?
What is the likelihood of a start-up company failing?
Which of the following is identified as a pro of working in a small start-up team?
Which of the following is identified as a pro of working in a small start-up team?
What does the text suggest about the relationships in a small start-up team?
What does the text suggest about the relationships in a small start-up team?
Which of the following statements about start-up companies is true?
Which of the following statements about start-up companies is true?
Which of the following is NOT an advantage of a partnership business?
Which of the following is NOT an advantage of a partnership business?
Which statement about sole proprietorships and partnerships is correct?
Which statement about sole proprietorships and partnerships is correct?
Which of the following best describes a Limited Liability Company (LLC)?
Which of the following best describes a Limited Liability Company (LLC)?
Which of the following is an advantage of a corporate business?
Which of the following is an advantage of a corporate business?
Which statement about starting a sole proprietorship is correct?
Which statement about starting a sole proprietorship is correct?
When choosing an employer, what should be considered besides the job offer itself?
When choosing an employer, what should be considered besides the job offer itself?
What is a key advantage of a partnership business structure?
What is a key advantage of a partnership business structure?
Which of the following is a disadvantage of a partnership?
Which of the following is a disadvantage of a partnership?
What is a crucial element that should be included in a partnership agreement?
What is a crucial element that should be included in a partnership agreement?
Which of the following is typically considered an advantage of a partnership?
Which of the following is typically considered an advantage of a partnership?
What is a key characteristic of a corporation?
What is a key characteristic of a corporation?
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Study Notes
Types of Business Organizations
- A corporation is owned by investors who purchase shares of the stock and are called shareholders.
- Examples of corporations include Microsoft and IKEA.
Corporation Advantages
- Profits and losses belong to the corporation.
- Better ability to raise capital.
- Limited liability.
Corporation Disadvantages
- Harder and costly to set up.
- Higher taxes.
- Managerial demands.
- Possible loss of control.
- Corporate operations are costly.
Limited Liability Company (LLC)
- A hybrid business structure that provides limited legal liability of a corporation and operational flexibility of a partnership or sole proprietorship.
- Examples of LLCs include Google LLC and Amazon.com Services LLC.
LLC Advantages
- Limits liability to the company owners for debts or losses.
- The profits of the LLC are shared by the owners.
- Flexible management.
LLC Disadvantages
- Beginning an LLC has high costs due to legal and filing fees.
- Agreements must be comprehensive and complex.
- Separate records: owners of LLCs must take care to keep their personal and business expenses separate.
Sole Proprietorship
- A business owned and run by someone for their own benefit.
- Examples of sole proprietorships include private tutors, farms, local barber shops, auto-repair shops, and YouTubers.
Sole Proprietorship Advantages
- Easy to set up.
- Privacy.
- Controlled by the owner.
- Profits are taxed only once.
- Owners have flexibility when running the business.
- Very few requirements for starting—often only a business license.
Sole Proprietorship Disadvantages
- Unlimited liability (no asset protection if anything happens in the business).
- Few financial resources.
- Limited managerial skills.
- Limited life.
Partnership
- A business owned by two or more people.
- Examples of partnerships include small shops and doctor offices.
Partnership Advantages
- Easy to set up.
- More resources available.
- Cost sharing.
- Broader skill and experience.
- Shared control.
- Profits taxed once.
Partnership Disadvantages
- Unlimited liability.
- Responsible for partner decisions.
- Issues with expansion, success, and termination.
- Partnership ends when any partner decides to end it.
- Selling the business is difficult—requires finding new partner.
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