EXAM 2 IN X100 IUPUI 2025
QUESTIONS AND ANSWERS
Sole Prioprietorship - ....ANSWER ...-a business owned and managed by a
single individual
Partnership - ....ANSWER ...-a business organization owned by two or more
persons who agree on a specific division of responsibilities and profits
Corporation - ....ANSWER ...-A business owned by stockholders who share
in its profits but are not personally responsible for its debts
Types of partnerships - ....ANSWER ...-general, limited, limited liability
The types of partnerships that do not limit liability - ....ANSWER ...-Limited
partners invest in the business for financial returns and are not responsible for its
debts and liabilities.
Shared characteristics of S-corporations and C-corporations -
....ANSWER ...-Both types of corporations allow for their own shareholders
and ownership setup. S Corps and C Corps alike are incorporated the same way, as
....COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 1
,well as issue stock and adopt bylaws. Both S Corps and C Corps have boards of
directors with directors and officers and file annual reports.
The differences between S-corporations and C-corporations -
....ANSWER ...-The biggest difference between C and S corporations is
taxes. C corporations pay tax on their income, plus you pay tax on whatever
income you receive as an owner or employee. An S corporation doesn't pay tax.
Instead, you and the other owners report the company revenue as personal income
The characteristics of limited liability companies - ....ANSWER ...-
Characteristics of limited liability company include separate legal existence, limited
liability, flexibility in taxation, and simplicity in operation.
How LLC's are similar to Corporations and Partnerships - ....ANSWER ...-
"LLC" stands for "limited liability company." It is similar to a corporation, but
offers more flexibility in management and taxation and generally has fewer record-
keeping requirements. ... LLCs and corporations are both business entities that are
created by filing formation documents with the state.
Differences between S-corporations and LLC'S - ....ANSWER ...-An LLC is
a type of business entity, while an S corporation is a tax classification. ... An S
corporation provides limited liability protection but also offers corporations with
100 shareholders or fewer to be taxed as a partnership. An S corporation is also
known as an S subchapter.
....COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 2
,Personal liability as a function of a business type - ....ANSWER ...-Sole
proprietorships are simplest to form, and if you don't register your business as
another entity, you'll automatically be considered a sole proprietorship. Owned by
one individual, this structure comes with the greatest personal liability.
Advantages of Sole Proprietorship - ....ANSWER ...-Easiest to start
Least regulated
Single owner keeps all the profits
Taxed once as personal income
Disadvantages of Sole Proprietorship - ....ANSWER ...-unlimited liability,
lack of continuity, lack of money, limited management skills, difficulty in hiring
employees
Advantages of Partnership - ....ANSWER ...-Two or more owners
More capital available
Relatively easy to start
Income taxed once as personal income
Disadvantages of Partnership - ....ANSWER ...-Unlimited liability
Management disagreements
Lack of continuity
....COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 3
, Frozen investment
Advantages of a corporation - ....ANSWER ...-Limited liability
Unlimited life
Separation of ownership and management
Transfer of ownership is easy
Easier to raise capital
Disadvantages of a corporation - ....ANSWER ...--double taxation
-cost of setup and report filing
What is required to start a sole proprietorship - ....ANSWER ...-Create a
business name and decide on a location for your business
File for a business license with your city or county, and get permission from your
locality if you want to operate your business from home.
Set up a business checking account so you don't mix up business and personal
spending.
If you plan to sell taxable products or services, you must register with your state's
taxing authority.
If you plan to hire employees, you'll need an Employer Tax ID Number (EIN)
from the IRS. Your bank may also require this tax number.
....COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 4
QUESTIONS AND ANSWERS
Sole Prioprietorship - ....ANSWER ...-a business owned and managed by a
single individual
Partnership - ....ANSWER ...-a business organization owned by two or more
persons who agree on a specific division of responsibilities and profits
Corporation - ....ANSWER ...-A business owned by stockholders who share
in its profits but are not personally responsible for its debts
Types of partnerships - ....ANSWER ...-general, limited, limited liability
The types of partnerships that do not limit liability - ....ANSWER ...-Limited
partners invest in the business for financial returns and are not responsible for its
debts and liabilities.
Shared characteristics of S-corporations and C-corporations -
....ANSWER ...-Both types of corporations allow for their own shareholders
and ownership setup. S Corps and C Corps alike are incorporated the same way, as
....COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 1
,well as issue stock and adopt bylaws. Both S Corps and C Corps have boards of
directors with directors and officers and file annual reports.
The differences between S-corporations and C-corporations -
....ANSWER ...-The biggest difference between C and S corporations is
taxes. C corporations pay tax on their income, plus you pay tax on whatever
income you receive as an owner or employee. An S corporation doesn't pay tax.
Instead, you and the other owners report the company revenue as personal income
The characteristics of limited liability companies - ....ANSWER ...-
Characteristics of limited liability company include separate legal existence, limited
liability, flexibility in taxation, and simplicity in operation.
How LLC's are similar to Corporations and Partnerships - ....ANSWER ...-
"LLC" stands for "limited liability company." It is similar to a corporation, but
offers more flexibility in management and taxation and generally has fewer record-
keeping requirements. ... LLCs and corporations are both business entities that are
created by filing formation documents with the state.
Differences between S-corporations and LLC'S - ....ANSWER ...-An LLC is
a type of business entity, while an S corporation is a tax classification. ... An S
corporation provides limited liability protection but also offers corporations with
100 shareholders or fewer to be taxed as a partnership. An S corporation is also
known as an S subchapter.
....COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 2
,Personal liability as a function of a business type - ....ANSWER ...-Sole
proprietorships are simplest to form, and if you don't register your business as
another entity, you'll automatically be considered a sole proprietorship. Owned by
one individual, this structure comes with the greatest personal liability.
Advantages of Sole Proprietorship - ....ANSWER ...-Easiest to start
Least regulated
Single owner keeps all the profits
Taxed once as personal income
Disadvantages of Sole Proprietorship - ....ANSWER ...-unlimited liability,
lack of continuity, lack of money, limited management skills, difficulty in hiring
employees
Advantages of Partnership - ....ANSWER ...-Two or more owners
More capital available
Relatively easy to start
Income taxed once as personal income
Disadvantages of Partnership - ....ANSWER ...-Unlimited liability
Management disagreements
Lack of continuity
....COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 3
, Frozen investment
Advantages of a corporation - ....ANSWER ...-Limited liability
Unlimited life
Separation of ownership and management
Transfer of ownership is easy
Easier to raise capital
Disadvantages of a corporation - ....ANSWER ...--double taxation
-cost of setup and report filing
What is required to start a sole proprietorship - ....ANSWER ...-Create a
business name and decide on a location for your business
File for a business license with your city or county, and get permission from your
locality if you want to operate your business from home.
Set up a business checking account so you don't mix up business and personal
spending.
If you plan to sell taxable products or services, you must register with your state's
taxing authority.
If you plan to hire employees, you'll need an Employer Tax ID Number (EIN)
from the IRS. Your bank may also require this tax number.
....COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 4
