chapter 7 quiz example #62733

A sole proprietorship is a business that is owned and operated by one person. The advantages of having a sole proprietorship is that they are easy and inexpensive to create. It gives the owner complete authority over all business activities. It also allows the owner to receive all the profits and the business also pays no taxes. The disadvantages of a sole proprietorship is financial. The owner must have unlimited liability or full responsibility for debts and actions of the business. Eventually, the death of the owner automatically dissolves unless there is a will to the contrary.

A partnership is a unincorporated business with two or more owners. This is the most common type of business. The Advantages include, easy and inexpensive to create, the partners have complete control, they can combine ideas, secure more capital. The disadvantages include different interests, one partner dies the partnership is over.

A corporation is a business that is registered by a state and operates apart from its owners. The advantages of a corporation are limited liability, the ability to raise investment money, perpetual existence, employee benefits and tax advantages. The disadvantages include expensive set up, more heavily taxed, taxes on profits.

insurance

full responsibility for all debts and actions of the business

is a participant in a partnership who has unlimited personal liability and takes full responsibility for managing the business

is a partner whose liability is a limited his or her investment.

they are liable only up to the amount of their individual business

is a corporation that is taxed like a partnership

is a legal entity that makes money for reasons other than owners profit.

is a company whose owners and managers e joy limited liability and some tax benefits but, it avoids some restrictions associated with subchapter S corporations.

is an entity that pays taxes on earnings (most popular of corporations and most expensive).