Business Structures Quiz: Test Your Knowledge (Intro to Business)

📚 Quick Study Guide

• 🏢 Sole Proprietorship: Owned and run by one person. Simple to set up but offers no liability protection.
• 🤝 Partnership: Owned and run by two or more people. Can be general (all partners share in the business's operational management and liability) or limited (some partners have limited liability and operational input).
• 🧑‍💼 Limited Liability Company (LLC): Offers the liability protection of a corporation but is taxed like a partnership (pass-through taxation).
• 🏦 Corporation: A legal entity separate from its owners. Can raise capital more easily but faces double taxation (corporate tax and individual income tax).
• 📜 S Corporation (S Corp): A special type of corporation that allows profits and losses to be passed through directly to the owners' personal income without being subject to corporate tax rates. Must meet specific IRS requirements.

🧪 Practice Quiz

1. What is the primary disadvantage of a sole proprietorship?
1. A. Double taxation
2. B. Unlimited liability
3. C. Complex setup
4. D. Limited lifespan
2. Which business structure provides the most liability protection for its owners?
1. A. Partnership
2. B. Sole Proprietorship
3. C. Corporation
4. D. S Corporation
3. Which business structure typically involves double taxation?
1. A. Sole Proprietorship
2. B. Partnership
3. C. C Corporation
4. D. LLC
4. Which business structure allows profits and losses to be passed through directly to the owners' personal income without being subject to corporate tax rates, while still providing liability protection?
1. A. C Corporation
2. B. LLC
3. C. S Corporation
4. D. General Partnership
5. Two friends want to start a business together but want to protect their personal assets from business debts. Which structure is MOST suitable?
1. A. Sole Proprietorship
2. B. General Partnership
3. C. LLC
4. D. Limited Partnership
6. Which of the following is generally the simplest and least expensive business structure to establish?
1. A. Corporation
2. B. LLC
3. C. Sole Proprietorship
4. D. S Corporation
7. What is a key difference between a general partnership and a limited partnership?
1. A. General partnerships require more paperwork.
2. B. Limited partnerships offer all partners limited liability.
3. C. In a limited partnership, some partners may have limited liability and operational input.
4. D. General partnerships are taxed as corporations.