Answers are provided at the end of each bullet. Note to grader: Student need only give one answer ( ie either sole proprietor, partnership, LLC or corporation) for each of the numbered bullets below
Legend
S= Sole proprietor
P= Partnership
L = LLC
C = corporation
* = S Corporation
ADVANTAGES
Limited liability C, * L
Sole ownership of profits S
Unlimited life C * L
Ease of formation S, P
Flexibility S, P
Transfer of ownership C * L
Relative freedom from governmental control S, P L
Increased ability and expertise C * L
Compared to an an S corporation, this structure has tax advantages S P L
Compared to an S corporation, this structure has fewer restrictions on ownership S P L
Combines aspects of a sole proprietor and a corporation *
Unlimited liability S, P
Governmental regulation C *
Lack of continuity S, P
Double taxation C
Difficulty obtaining large sums of capital S, P
Organizing expenses C *
Relatively limited viewpoint and experience S
Activity restrictions C
Annual reporting requirements C
Part C: Answers:
1. T
2. C
3. P
4. C
5. T
6. T
7. C
8. T
9. C
10.C
11.T
12.C
13.T
14.P
15.P