WGU C713 Study Guide (V.3) Unit 7 Questions and Answers 2023 Solved Correctly

What are the common form of business organizations? - sole proprietorship, general partnership, limited partnership, C corporation or S corporation or a limited liability company What is a sole proprietorship? - an unincorporated business with a single owner who pays personal income tax on profits earned from the business. How is a sole proprietorship formed? How is it terminated? - to form: turn a profit, get all the right licences and permits. To terminate: 1. contact the local small business administration m employees. 3. provide termination notices to landlords. 4. pay any outstanding bills. 5. liquidate assets. 6. keep complete records. What are some of the advantages and disadvantages of a sole proprietorship? - advantages: easy to create, autonomy, total ownership of business finances. Disadvantages:can only have one owner, impossible to pass on the business. Hard to raise capital. Seek funding from banks, taxation is challenging, unlimited liability. What is the difference between a general partnership and a limited partnership? - General: when two individuals agree to run a business together, and share in the profits and losses. Limited: also known as a silent partner, a business partner whose liability is limited to the amount of their investment in the company. How is a partnership formed? How is it terminated? - formed when two individuals agree to run a business together, Terminated when the individuals choose to no longer work together. What are some of the advantages and disadvantages of a general partnership? of a limited partnership? - General Advantages: equal managing control among partners. Disadvantages: unlimited liability. Limited advantages: limited liability, general partners have managing control. Disadvantages: lose liability protection if they manage. General partners must wait for profit dist. after limited partners receive their share. What is the difference between a C corporation and an S corporation? - A C corporations profits are taxed separately from its owners under sub chapter C of the Internal Revenue Code. In an Scorporation, the profits are passed on to the shareholders, and are taxed based on personal returns. This is done under sub-chapter S of the Internal Revenue Code. How is a corporation formed? How is it terminated? - To start a corporation, the corporate founders must file the articles of incorporation. Must state whether the company is non or for profit, the name of the company, founders state identity, how long they want the company to exist and its purpose. To terminate:Dissolution must be authorized by the board, must file articles of dissolution, complete affairs, notify creditors, distribute assets.