TN Business and Law Exam Questions with 100% Complete Answers Graded A+

Success Factors in Your Business - organized, consistent approach Factors in Business Failure - poor planning and inadequate management Entrepreneur - a person engaged in strategic activities that involve initiation and development of a new business Calculated Risk - something that is well thought through where all outcomes are considered Rewards of Owning Your Own Business - own boss, flexible time, freedom and independence, personal satisfaction Challenges of Owning Business - long hours, manage cash flow, payroll, overwhelming responsibility, finding/keeping employees, taxes, government regulations Business Plan - a document that outlines business strategies and goals Key Functions of a Business Plan - planning tool, loan or investor document, benchmarking tool Element of a Business Plan - cover page, executive summary, company summary, products and services, market analysis, market strategy, financial plan What could be a pitfall to a business plan? - must portray an accurate picture of business What are the different types of business structures? - sole proprietorship, partnership, c corporation, s corporation, limited liability company Sole Proprietorship - a business that has one individual as the owner who is responsible for 100% of the decisions made on behalf of the business and owns all of the business assets Advantages of a Sole Proprietorship - minimal legal restrictions, simple ownership form, low startup cost, sole owner of profits, freedom in decision making Disadvantages to a Sole Proprietorship - unlimited liability, less available capital, possible difficulty in obtaining long term financing, dissolution of the business in even of owner death Partnership - a business relationship between two or more persons who join to carry on a trade or business. each person contributes money, property, labor, or skill, and each partner expects to share in the profits and losses of the business. Two types of partnership - general and limited Advantages of a General Partnership - ease of formation, direct profit rewards, larger management base than that of a sole proprietorship Disadvantages to a General Partnership - unlimited liability, potential for disagreements, lack of continuity, difficulty in withdrawing from a partnership C Corporation - a legal business entity that has independent ownership of assets and liabilities from its shareholders Requirements of C Corporation - board of directors and corporate officers, stockholders as owner of the company, board meetings, board empowered to authorize certain actions Advantages of a C Corporation - separate legal entity, limited liability for stockholders, unlimited life of the business, availability of capital resources, transfer of ownership though stock Disadvantages to a C Corporation - complex and expensive organization, limitations on corporations activities and decisions by the corporate charter, extensive record keeping and regulation, double taxation S Corporation - a legal business entity formed under the rules of Subchapter S of the Internal Revenue Code. It is taxed like a partnership by passing items of income, loss, deduction, and credits through to its shareholders to be included on their separate returns Requirements for S Corporation - one class of stock, no more than 100 shareholders who are citizens or legal residents of US, filing of IRS Form 2553 Limited Liability Company (LLC) - a legal business entity that has characteristics of both sole proprietorships and corporations. Federal income taxes are paid only on income distributed to members as ordinary income. Member have protection from liability for actions taken by the company or by other members of your company but are not protected from liability for personal actions. Advantages of a LLC - limited disclosure of owners, limited documentation, no advance IRS filings, no public disclosure of finances, limited liability for managers and members, ability to delegate management to non members Joint Venture - generally formed on a project basis in order to integrate positive attributes and resources of to or more companies Purpose of Licensing - protects the health, safety, and welfare of the public Tennessee Board of Licensing Contractors - regulates contracting activities through examination, licensure, and disciplinary TN Contractor License Requirements - must have contractor license for construction projects of $25,000 or more Licensing Process - testing, financial statement, reference letter, corporations and LLC, application, signature and notarize, submit application and $250 fee, board review, issuance of license