ARE Practice Management 5.0 PcM Exam Questions and Answers

ARE Practice Management 5.0 PcM Exam Questions and Answers Sole Proprietorship - Answers-The business is owned by an individual .Are Sole Proprietorship licenses filed through local, state, or federal? - Answers-Local .What does one need to start a Sole Proprietorship? - Answers-Name and location of business, Electronic communication, Business license, Employee Paperwork .Who is Liable in a Sole Proprietorship? - Answers-Owner .What are tax responsibilities like for a Sole Proprietorship? - Answers-Owner is taxed once, and business profits and losses are deductible from businesses gross income. State and Federal income Tax must be filed by the individual quarterly and must pay self employment tax, social security, and medicare. .What happens to a Sole Proprietorship when the owner dies? - Answers-Business dies, unless ownership of business is transferred. .General Partnership - Answers-Two or more people (general partners) share in the management, profits and risk of the business .What is needed to start a Partnership? - Answers-Same as Sole Proprietorship, Name and location of business, Electronic communication, Business license, Employee Paperwork .What is an advantage of a Partnership? - Answers-More opportunities to get accepted for loans, and generally the business has more assets .What are tax responsibilities for a Partnership? - Answers-State and Federal income Tax must be filed by the individual quarterly and must pay self employment tax, social security, and medicare. .What are disadvantages of a Partnership? - Answers-Disagreements between partners can threaten the business, and partners are liable for the actions of the other .Are Partnership licenses filed through local, state, or federal? - Answers-Local .Limited Partnership - Answers-Has at least one general partner (invests in the business, manages it and are financially responsible for it) and at least one limited partner (investor who receives a portion of the profits but has no say in the management of the company) .How are liabilities shared in a Limited Partnership? - Answers-Partners are liable to the extent of the their investments .C Corporation - Answers-An association of individuals (stockholders, directors and officers) that exists as a legal entity apart from its members .What is needed to start a C Corporation? - Answers-Article of Incorporation must be drawn by an attorney and filed by state, and a Corporation Identification Number .Where does one get a Corporation identification Number - Answers-Secretary of State's Office .Are C corporation paperwork filed through local, state, or federal? - Answers-State .Stockholders - Answers-Owners of the corporation in proportion to the number of shares they own .Directors - Answers-Have the fiduciary duty to act in the best interest of the stockholders and are responsible for broad policy decisions .Officers - Answers-Carry out the day-to-day management of the corporation .How is liability shared in a C-Corporation? - Answers-Company is financially and legally independent from Shareholders .What are Tax responsibilities like for C-Corporations? - Answers-The Company is taxed at lower rates than the individual, and then Individuals are taxed by their Dividends .Are C Corporations Paid through Dividends? - Answers-Yes .What are Dividends - Answers-A share of profits paid to Shareholders by a corporation .How many Shareholders can an C-Corporation have? - Answers-Unlimited .S Corporation - Answers-A corporation that chooses to allocate it's income and losses directly to shareholders in proportion to their holdings. .Are S corporation paperwork filed through local, state, or federal? - Answers-State .Are S Corporations Paid through Dividends? - Answers-No .How many Shareholders can an S-Corporation have? - Answers-Limited to 100 .What are tax responsibilities like for S-Corporations? - Answers-Individuals are taxed in proportion to their share .Professional Corporation - Answers-Similar to other corporations except that liability for malpractice is limited to the person responsible for the act. .In a Professional Corporation, Does everyone need to be licensed professionals? - Answers-Yes .What happens to the company when the owner of a Professional Corporation dies? - Answers-Nothing .Are Professional Corporation paperwork filed through local, state, or federal? - Answers-State .Limited Liability Company (LLC) - Answers-Business structure that combines the advantages of a partnership or sole proprietorship with the limited liability of a corporation. .What is needed to establish an LLC? - Answers-LLC Certificate or other business license .Are LLC's paperwork filed through local, state, or federal? - Answers-State .What are tax responsibilities like in an LLC - Answers-Taxed at personal level as profits and losses are passed through members (or owners) who report these in their personal taxes, although some states do tax LLC separately (like a corporation) .Joint Venture - Answers-A temporary association of two or more persons or firms for the purpose of completing a specific project or achieving a specific goal .What is needed to establish a Joint Venture? - Answers-Written Teaming agreement or Memorandum of Understanding, drawn by an attorney to establish division of responsibilities .What are tax responsibilities like for Joint Ventures? - Answers-Taxed by the individual like a partnership .Teaming Agreement - Answers-Defines the roles, responsibilities and contractual relationships that will be established if the firms are awarded the project and the joint venture is formed. (Aka Memorandum of Understanding) .Memorandum of Understanding - Answers-Defines the roles, responsibilities and contractual relationships that will be established if the firms are awarded the project and the joint venture is formed (Aka Teaming Agreement)