WSU BLAW 210- EXAM 2: GRIFFEATH
QUESTIONS AND 100% CORRECT
ANSWERS 2025-2026 UPDATED.
The major forms of business ownership are- - Answer Sole proprietorships
General partnerships
Limited partnerships
Corporations
Liability companies
Sole proprietorships: - Answer The simplest form of business organization.
Exists when a person wants to start their own business.
They require no formalities and few filings.
Sole proprietorships- Advantages: - Answer You don't have to pay to incorporate
Much easier on taxes
Sole proprietorships- Disadvantages: - Answer Debts and liabilities are on you personally
This includes fines
General partnerships: - Answer When two or more people start a business for profit.
All partners are personally liable for the debts of the partnership
Many use a written agreement to help clarify their relationship.
Unless there is a written agreement to the contrary, each partner has an equal share and equal
vote in the partnership.
Partnership ends with death or withdrawal from partners
Agreements must be unanimous
Partners have a fiduciary relationship to one another. (includes full disclosure)
*Fiduciary relationship: - Answer Partners have a duty of loyalty to one another, to good
faith, and to put the interests of the partnership above their own interests.
,General Partnership- Disadvantages: - Answer RUPA applies if you dont have an agreement
Wrapping up can be complex
- How to pay outgoing partners
- If a partner messes up, both are liable
Limited Partnerships: - Answer Similar to general partnership but with better protections
from investors
Need this to be in writing
Requires a general partner and at least one limited partner
General partner has a fiduciary duty to the limited partners
Terminates just like a general partner
The order to payment is creditors first, limited partners second, general partners third.
Limited Partnerships- Advantages: - Answer Limited partner is not liable for debts or other
liabilities beyond their initial investment
A good lawyer might be able to get you in deeper than you intended
*Uniform Limited Partnership Act.: - Answer Requires limited partnership agreements to be
in writing. (If you fail to have a written agreement, you will be deemed a general partnership
and all partners will be personally liable for the debts of a partnership.)
Corporations: - Answer Corporations are governed by state laws and charted by the state.
Generally, the corporation is owned by the shareholders, and overseen by the Board of
Directors. The Officers provide the day-today management.
Corporations do pay taxes on their products.
Considered a separate entity and can sign contracts, sue, and be sued.
Board of Directors: - Answer These guys vote to make big decisions
They appoint the officers
They have a fiduciary duty to the shareholders
Protected by the business judgement rule
Run by the officers
, - business address, name, business type and stock details
2. Have the shareholders elect a board of directors
3. Approve bylaws and appoint officers
Advantages of a corporation: - Answer They don't dissolve with the leaving of a partner
Shareholders all have limited liability
- Unless you can pierce the corporate veil
Disadvantages of a corporation: - Answer Double taxation, first on the corporation then on
the individual
Business judgement rule may protect the board of Directors from Shareholders
Alternate corporate types: - Answer sub-S corporation
Close corporation
Professional corporation
Sub-S Corporation: - Answer A regular corporation that has made a Sub-S tax filing to be
treated as a partnership for tax purposes.
Close corporation: - Answer Owned by a small number of shareholders (usually family
members) which have restrictions on the ability to sell shares to anyone other than the current
shareholders.
Professional corporation: - Answer The type of corporation usually required by the state of
professionals deciding to incorporate.
- For doctors,lawyers, and other professionals
Liability companies: - Answer Provides corporate protections without having the
complexities of a corporation
States have their own rule
Run be members instead of shareholders
Liability companies- Advantages: - Answer Members have limited liability
QUESTIONS AND 100% CORRECT
ANSWERS 2025-2026 UPDATED.
The major forms of business ownership are- - Answer Sole proprietorships
General partnerships
Limited partnerships
Corporations
Liability companies
Sole proprietorships: - Answer The simplest form of business organization.
Exists when a person wants to start their own business.
They require no formalities and few filings.
Sole proprietorships- Advantages: - Answer You don't have to pay to incorporate
Much easier on taxes
Sole proprietorships- Disadvantages: - Answer Debts and liabilities are on you personally
This includes fines
General partnerships: - Answer When two or more people start a business for profit.
All partners are personally liable for the debts of the partnership
Many use a written agreement to help clarify their relationship.
Unless there is a written agreement to the contrary, each partner has an equal share and equal
vote in the partnership.
Partnership ends with death or withdrawal from partners
Agreements must be unanimous
Partners have a fiduciary relationship to one another. (includes full disclosure)
*Fiduciary relationship: - Answer Partners have a duty of loyalty to one another, to good
faith, and to put the interests of the partnership above their own interests.
,General Partnership- Disadvantages: - Answer RUPA applies if you dont have an agreement
Wrapping up can be complex
- How to pay outgoing partners
- If a partner messes up, both are liable
Limited Partnerships: - Answer Similar to general partnership but with better protections
from investors
Need this to be in writing
Requires a general partner and at least one limited partner
General partner has a fiduciary duty to the limited partners
Terminates just like a general partner
The order to payment is creditors first, limited partners second, general partners third.
Limited Partnerships- Advantages: - Answer Limited partner is not liable for debts or other
liabilities beyond their initial investment
A good lawyer might be able to get you in deeper than you intended
*Uniform Limited Partnership Act.: - Answer Requires limited partnership agreements to be
in writing. (If you fail to have a written agreement, you will be deemed a general partnership
and all partners will be personally liable for the debts of a partnership.)
Corporations: - Answer Corporations are governed by state laws and charted by the state.
Generally, the corporation is owned by the shareholders, and overseen by the Board of
Directors. The Officers provide the day-today management.
Corporations do pay taxes on their products.
Considered a separate entity and can sign contracts, sue, and be sued.
Board of Directors: - Answer These guys vote to make big decisions
They appoint the officers
They have a fiduciary duty to the shareholders
Protected by the business judgement rule
Run by the officers
, - business address, name, business type and stock details
2. Have the shareholders elect a board of directors
3. Approve bylaws and appoint officers
Advantages of a corporation: - Answer They don't dissolve with the leaving of a partner
Shareholders all have limited liability
- Unless you can pierce the corporate veil
Disadvantages of a corporation: - Answer Double taxation, first on the corporation then on
the individual
Business judgement rule may protect the board of Directors from Shareholders
Alternate corporate types: - Answer sub-S corporation
Close corporation
Professional corporation
Sub-S Corporation: - Answer A regular corporation that has made a Sub-S tax filing to be
treated as a partnership for tax purposes.
Close corporation: - Answer Owned by a small number of shareholders (usually family
members) which have restrictions on the ability to sell shares to anyone other than the current
shareholders.
Professional corporation: - Answer The type of corporation usually required by the state of
professionals deciding to incorporate.
- For doctors,lawyers, and other professionals
Liability companies: - Answer Provides corporate protections without having the
complexities of a corporation
States have their own rule
Run be members instead of shareholders
Liability companies- Advantages: - Answer Members have limited liability
