Entrepreneurship Legal and Business Structure

Question 1

What is a sole proprietorship?

Accepted Answer

A business owned and operated by a single individual with no legal distinction between owner and business

Answer

A business owned by two or more partners equally

Answer

A nonprofit organization run by one executive

Answer

A one-person LLC registered with the state

Question 2

What is the main advantage of forming an LLC (Limited Liability Company)?

Accepted Answer

Personal liability protection for the owner's assets separate from business debts

Answer

Unlimited investment from the public via stock offerings

Answer

Elimination of all business taxes

Answer

The ability to have unlimited shareholders

Question 3

What is an S corporation?

Accepted Answer

A pass-through tax entity that avoids double taxation while providing liability protection

Answer

A nonprofit organization with tax-exempt status

Answer

A publicly traded company on a stock exchange

Answer

A subsidiary owned by a larger C corporation

Question 4

What is a partnership agreement?

Accepted Answer

A legal document outlining the rights, responsibilities, and profit sharing of business partners

Answer

A contract between a business and its suppliers

Answer

A franchise agreement between a licensor and franchisee

Answer

A non-disclosure agreement signed by employees

Question 5

What is a trademark?

Accepted Answer

A symbol, name, or phrase legally registered to distinguish a company's goods or services

Answer

A government license to operate a business in a specific industry

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A patent protecting a new invention or process

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A copyright covering original artistic works

Question 6

What is an employer identification number (EIN)?

Accepted Answer

A federal tax ID number assigned by the IRS to identify a business entity

Answer

A state-issued business license number

Answer

A social security number used by sole proprietors

Answer

A registration number for importing goods into the U.S.