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

  1. Limited liability C, * L

  2. Sole ownership of profits S

  3. Unlimited life C * L

  4. Ease of formation S, P

  5. Flexibility S, P

  6. Transfer of ownership C * L

  7. Relative freedom from governmental control S, P L

  8. Increased ability and expertise C * L

  9. Compared to an an S corporation, this structure has tax advantages S P L

  10. Compared to an S corporation, this structure has fewer restrictions on ownership S P L

  11. Combines aspects of a sole proprietor and a corporation *

Disadvantages

  1. Unlimited liability S, P

  2. Governmental regulation C *

  3. Lack of continuity S, P

  4. Double taxation C

  5. Difficulty obtaining large sums of capital S, P

  6. Organizing expenses C *

  7. Relatively limited viewpoint and experience S

  8. Activity restrictions C

  9. 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