Brightwood - Practice Management ARE
5.0 Exam Q&A 100% Solved
Sole Proprietorship - ✔✔The Business is Owned by an individual. The business
may operate under the Owner's name or under a Company name.
Advantages of Sole Proprietorship - ✔✔1. Ease of formation/ setup
2. Retention of control/ total management by the Owner.
3. Possible tax advantage
What are the Tax advantages for the Sole Proprietorship? - ✔✔When the
business experiences expensive or losses they may be deducted from the gross
income of the business.
Disadvantages of Sole Proprietorship - ✔✔Limited to life of owner
Equity capital limited to owner's personal wealth
Unlimited liability
Difficult to sell ownership interest
Partnership - ✔✔A business in which two or more persons combine their assets
and skills
Advantages of Partnership - ✔✔Ease of start-up
Availability of capital and credit
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©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025.
,Personal interest
Combined business skills and knowledge
Retention of profits
No special taxes
Disadvantages of Partnership - ✔✔Unlimited liability
Partnership dissolves when one partner dies or wishes to sell
Difficult to transfer ownership
General partnership agreement - ✔✔A written agreement that partners sign to
form a general partnership.
Advantages of General Partnership - ✔✔ability to pool financial resources,
ability to share responsibilities and capitalize on complementary skills, ease of
formation, possible tax advantages
Limited Partnership (LP) - ✔✔Similar to a Partnership, but has at least one
General Partner and one Limited Partner.
General Partner invest in the business, manage it, and are financially
responsible for it
Advantages of Limited Partnership - ✔✔1. General partners have right to
participate in management
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©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025.
,2. Limited partners have limited liability for business obligations
3. Choice of taxation, deductible losses and expenses
4. Survives withdrawal of partner (except sole general partner)
C Corporation - ✔✔The most common type of corporation, which is a legal
business entity that offers limited liability to all of its owners, who are called
stockholders
Advantages of C Corporations - ✔✔-Owners liable only up to the amount of
their investment
-Easier to raise capital
-No restrictions on # of shareholders
-Stock is liquid if traded on major stock exchange
-Stock options for employees
Disadvantages of a corporation - ✔✔-double taxation
-cost of setup and report filing
S corporation - ✔✔A unique government creation that looks like a corporation
but is taxed like sole proprietorships and partnerships
Advantages of S Corporation - ✔✔-Avoids double taxation of a corporation
-Retains the corporation's legal benefit of limited liability
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©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025.
, Limited Liability Company (LLC) - ✔✔A hybrid form of business enterprise that
offers the limited liability of the corporation but the tax advantages of a
partnership.
work environment - ✔✔the physical conditions and the psychological
atmosphere in which employees work
hiring process - ✔✔Advertising, Unsolicited Resumes and Word of Mouth
Equal Employment Opportunity
Civil Rights Act of 1984
ADA- American Disabilities Act
Review of past Work
Contract for Employment
Non-Compete Clause
Fair Credit Reporting Act (FCRA) - ✔✔U.S act that protects privacy of
background information and ensures that information supplied is accurate.
Drug-Free Workplace Act - ✔✔U.S. law that requires federal contractors with
contracts of $100,000 or more as well as recipients of grants from federal
government to certify they are maintaining a drug-free workplace.
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©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025.
5.0 Exam Q&A 100% Solved
Sole Proprietorship - ✔✔The Business is Owned by an individual. The business
may operate under the Owner's name or under a Company name.
Advantages of Sole Proprietorship - ✔✔1. Ease of formation/ setup
2. Retention of control/ total management by the Owner.
3. Possible tax advantage
What are the Tax advantages for the Sole Proprietorship? - ✔✔When the
business experiences expensive or losses they may be deducted from the gross
income of the business.
Disadvantages of Sole Proprietorship - ✔✔Limited to life of owner
Equity capital limited to owner's personal wealth
Unlimited liability
Difficult to sell ownership interest
Partnership - ✔✔A business in which two or more persons combine their assets
and skills
Advantages of Partnership - ✔✔Ease of start-up
Availability of capital and credit
Page 1 of 44
©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025.
,Personal interest
Combined business skills and knowledge
Retention of profits
No special taxes
Disadvantages of Partnership - ✔✔Unlimited liability
Partnership dissolves when one partner dies or wishes to sell
Difficult to transfer ownership
General partnership agreement - ✔✔A written agreement that partners sign to
form a general partnership.
Advantages of General Partnership - ✔✔ability to pool financial resources,
ability to share responsibilities and capitalize on complementary skills, ease of
formation, possible tax advantages
Limited Partnership (LP) - ✔✔Similar to a Partnership, but has at least one
General Partner and one Limited Partner.
General Partner invest in the business, manage it, and are financially
responsible for it
Advantages of Limited Partnership - ✔✔1. General partners have right to
participate in management
Page 2 of 44
©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025.
,2. Limited partners have limited liability for business obligations
3. Choice of taxation, deductible losses and expenses
4. Survives withdrawal of partner (except sole general partner)
C Corporation - ✔✔The most common type of corporation, which is a legal
business entity that offers limited liability to all of its owners, who are called
stockholders
Advantages of C Corporations - ✔✔-Owners liable only up to the amount of
their investment
-Easier to raise capital
-No restrictions on # of shareholders
-Stock is liquid if traded on major stock exchange
-Stock options for employees
Disadvantages of a corporation - ✔✔-double taxation
-cost of setup and report filing
S corporation - ✔✔A unique government creation that looks like a corporation
but is taxed like sole proprietorships and partnerships
Advantages of S Corporation - ✔✔-Avoids double taxation of a corporation
-Retains the corporation's legal benefit of limited liability
Page 3 of 44
©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025.
, Limited Liability Company (LLC) - ✔✔A hybrid form of business enterprise that
offers the limited liability of the corporation but the tax advantages of a
partnership.
work environment - ✔✔the physical conditions and the psychological
atmosphere in which employees work
hiring process - ✔✔Advertising, Unsolicited Resumes and Word of Mouth
Equal Employment Opportunity
Civil Rights Act of 1984
ADA- American Disabilities Act
Review of past Work
Contract for Employment
Non-Compete Clause
Fair Credit Reporting Act (FCRA) - ✔✔U.S act that protects privacy of
background information and ensures that information supplied is accurate.
Drug-Free Workplace Act - ✔✔U.S. law that requires federal contractors with
contracts of $100,000 or more as well as recipients of grants from federal
government to certify they are maintaining a drug-free workplace.
Page 4 of 44
©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025.
