mie 201 exam 2 Questions & Answers 100% Correct!

Advantages of operating a Sole Proprietorship? - ANSWERSsimplicity (easy to establish and less paperwork-only requirement is business licenses and permit) single layer of taxation!!! privacy (not required to report anything to anyone) flexibility and control fewer limitations on personal income Personal satisfaction (take your own risks and enjoy the reward) Disadvantages of sole proprietorship - ANSWERSfinancial liability (unlimited liability) demands of the owner (alot more than picking your work schedule.. alot of decisions are in your hands) limited managerial perspective resource limitation no employee benefits for the owner finite life span (owners death may be the demise of the business) what limits a sole proprietors ability to expand? - ANSWERSresource limitation Partnerships - ANSWERSa company that is owned by two or more people but is not a corporation; appropriate for firms that need more resources and leadership talent but do not need fundraising capabilites General partnership - ANSWERSall partners have JOINT AUTHORITY to make decisions and JOINT LIABILITY for the firms financial obligations (if a partnership gets sued or goes bankrupt ALL the partners to dig into their own pockets to pay the bills, like a sole proprietorship) Limited partnership - ANSWERSminimize personal liability exposure; one or more persons act as GENERAL PARTNERS who run the business and have the same UNLIMITED liability as sole proprietors ; remaining owners are limited partners who do not participate in running the business & have limited liability Limited liability - ANSWERSthe max amount they are liable for is whatever amount each invested in the business master limited partnership (MLP) - ANSWERSallowed to raise money by selling UNITS of ownership to the general public, in the same way corporations sell shares of stock to the public--this gives fundraising capabilities WITHOUT double taxation disadvantage limited liability partnership (LLP) - ANSWERSform of business was created to help protect individual partners in certain professions from major mistakes by other partner in the firm; each partner has UNLIMITED LIABILITY for the partnership as a whole