TN Business and Law Exam Test with Answers Graded A+
Success Factors in Your Business organized, consistent approach
Factors in Business Failure poor planning and inadequate management
a person engaged in strategic activities that involve initia-
Entrepreneur
tion and development of a new business
something that is well thought through where all out-
Calculated Risk
comes are considered
own boss, flexible time, freedom and independence, per-
Rewards of Owning Your Own Business
sonal satisfaction
long hours, manage cash flow, payroll, overwhelming re-
Challenges of Owning Business sponsibility, finding/keeping employees, taxes, govern-
ment regulations
Business Plan a document that outlines business strategies and goals
planning tool, loan or investor document, benchmarking
Key Functions of a Business Plan
tool
cover page, executive summary, company summary, prod-
Element of a Business Plan ucts and services, market analysis, market strategy, finan-
cial plan
What could be a pitfall to a business plan? must portray an accurate picture of business
sole proprietorship, partnership, c corporation, s corpora-
What are the ditterent types of business structures?
tion, limited liability company
a business that has one individual as the owner who is
Sole Proprietorship responsible for 100% of the decisions made on behalf of
the business and owns all of the business assets
minimal legal restrictions, simple ownership form, low
Advantages of a Sole Proprietorship startup cost, sole owner of profits, freedom in decision
making
, unlimited liability, less available capital, possible diflculty
Disadvantages to a Sole Proprietorship in obtaining long term financing, dissolution of the busi-
ness in even of owner death
a business relationship between two or more persons who
join to carry on a trade or business. each person con-
Partnership
tributes money, property, labor, or skill, and each partner
expects to share in the profits and losses of the business.
Two types of partnership general and limited
ease of formation, direct profit rewards, larger manage-
Advantages of a General Partnership
ment base than that of a sole proprietorship
unlimited liability, potential for disagreements, lack of
Disadvantages to a General Partnership
continuity, diflculty in withdrawing from a partnership
a legal business entity that has independent ownership of
C Corporation
assets and liabilities from its shareholders
board of directors and corporate oflcers, stockholders as
Requirements of C Corporation owner of the company, board meetings, board empow-
ered to authorize certain actions
separate legal entity, limited liability for stockholders, un-
Advantages of a C Corporation limited life of the business, availability of capital resources,
transfer of ownership though stock
complex and expensive organization, limitations on cor-
Disadvantages to a C Corporation porations activities and decisions by the corporate charter,
extensive record keeping and regulation, double taxation
a legal business entity formed under the rules of Sub-
chapter S of the Internal Revenue Code. It is taxed like a
S Corporation partnership by passing items of income, loss, deduction,
and credits through to its shareholders to be included on
their separate returns
, one class of stock, no more than 100 shareholders who are
Requirements for S Corporation
citizens or legal residents of US, filing of IRS Form 2553
a legal business entity that has characteristics of both sole
proprietorships and corporations. Federal income taxes
are paid only on income distributed to members as or-
Limited Liability Company (LLC) dinary income. Member have protection from liability for
actions taken by the company or by other members of your
company but are not protected from liability for personal
actions.
limited disclosure of owners, limited documentation, no
advance IRS filings, no public disclosure of finances, limit-
Advantages of a LLC
ed liability for managers and members, ability to delegate
management to non members
generally formed on a project basis in order to integrate
Joint Venture
positive attributes and resources of to or more companies
Purpose of Licensing protects the health, safety, and welfare of the public
regulates contracting activities through examination, li-
Tennessee Board of Licensing Contractors
censure, and disciplinary
must have contractor license for construction projects of
TN Contractor License Requirements
$25,000 or more
testing, financial statement, reference letter, corporations
Licensing Process and LLC, application, signature and notarize, submit ap-
plication and $250 fee, board review, issuance of license
lower business and liability insurance premiums, reduce
Risk Management Benefits chances of being sued, improve chances of prevailing in a
lawsuit
supplement your risk management program to protect
Insurance
your business against unforeseen events
Bond
Success Factors in Your Business organized, consistent approach
Factors in Business Failure poor planning and inadequate management
a person engaged in strategic activities that involve initia-
Entrepreneur
tion and development of a new business
something that is well thought through where all out-
Calculated Risk
comes are considered
own boss, flexible time, freedom and independence, per-
Rewards of Owning Your Own Business
sonal satisfaction
long hours, manage cash flow, payroll, overwhelming re-
Challenges of Owning Business sponsibility, finding/keeping employees, taxes, govern-
ment regulations
Business Plan a document that outlines business strategies and goals
planning tool, loan or investor document, benchmarking
Key Functions of a Business Plan
tool
cover page, executive summary, company summary, prod-
Element of a Business Plan ucts and services, market analysis, market strategy, finan-
cial plan
What could be a pitfall to a business plan? must portray an accurate picture of business
sole proprietorship, partnership, c corporation, s corpora-
What are the ditterent types of business structures?
tion, limited liability company
a business that has one individual as the owner who is
Sole Proprietorship responsible for 100% of the decisions made on behalf of
the business and owns all of the business assets
minimal legal restrictions, simple ownership form, low
Advantages of a Sole Proprietorship startup cost, sole owner of profits, freedom in decision
making
, unlimited liability, less available capital, possible diflculty
Disadvantages to a Sole Proprietorship in obtaining long term financing, dissolution of the busi-
ness in even of owner death
a business relationship between two or more persons who
join to carry on a trade or business. each person con-
Partnership
tributes money, property, labor, or skill, and each partner
expects to share in the profits and losses of the business.
Two types of partnership general and limited
ease of formation, direct profit rewards, larger manage-
Advantages of a General Partnership
ment base than that of a sole proprietorship
unlimited liability, potential for disagreements, lack of
Disadvantages to a General Partnership
continuity, diflculty in withdrawing from a partnership
a legal business entity that has independent ownership of
C Corporation
assets and liabilities from its shareholders
board of directors and corporate oflcers, stockholders as
Requirements of C Corporation owner of the company, board meetings, board empow-
ered to authorize certain actions
separate legal entity, limited liability for stockholders, un-
Advantages of a C Corporation limited life of the business, availability of capital resources,
transfer of ownership though stock
complex and expensive organization, limitations on cor-
Disadvantages to a C Corporation porations activities and decisions by the corporate charter,
extensive record keeping and regulation, double taxation
a legal business entity formed under the rules of Sub-
chapter S of the Internal Revenue Code. It is taxed like a
S Corporation partnership by passing items of income, loss, deduction,
and credits through to its shareholders to be included on
their separate returns
, one class of stock, no more than 100 shareholders who are
Requirements for S Corporation
citizens or legal residents of US, filing of IRS Form 2553
a legal business entity that has characteristics of both sole
proprietorships and corporations. Federal income taxes
are paid only on income distributed to members as or-
Limited Liability Company (LLC) dinary income. Member have protection from liability for
actions taken by the company or by other members of your
company but are not protected from liability for personal
actions.
limited disclosure of owners, limited documentation, no
advance IRS filings, no public disclosure of finances, limit-
Advantages of a LLC
ed liability for managers and members, ability to delegate
management to non members
generally formed on a project basis in order to integrate
Joint Venture
positive attributes and resources of to or more companies
Purpose of Licensing protects the health, safety, and welfare of the public
regulates contracting activities through examination, li-
Tennessee Board of Licensing Contractors
censure, and disciplinary
must have contractor license for construction projects of
TN Contractor License Requirements
$25,000 or more
testing, financial statement, reference letter, corporations
Licensing Process and LLC, application, signature and notarize, submit ap-
plication and $250 fee, board review, issuance of license
lower business and liability insurance premiums, reduce
Risk Management Benefits chances of being sued, improve chances of prevailing in a
lawsuit
supplement your risk management program to protect
Insurance
your business against unforeseen events
Bond
