1.Corporations offer the most protection to an owners personal assets.

True

False

2.A sole-proprietorship is the easiest type of business to set up.

True

False

3.Copyrights can be used to protect intellectual capital from unauthorized and uncompensated use.

True

False

4.The key drawbacks of using a sole-proprietorship as a legal structure for a business include:

Its difficult for investors to invest in a sole-proprietorship

Corporations may be reluctant to do business with a sole-proprietorship

Creditors can look to the owners personal assets for repayment of debts

All of the above

5.The profits of a sole-proprietorship are taxed at:

The federal and state corporate tax rates

The owners individual federal and state tax rates

15 percent for long-term profits and 30 percent for short-term profits

Sole-proprietorship profits are not taxed

6.The profits on a limited liability corporation (LLC) are taxed at:

The federal and state corporate tax rates

The federal and state partnership tax rates

The owners individual federal and state tax rates

15 percent for long-term profits and 30 percent for short-term profits

7.The profits of a business organized as an S-Corporation are taxed at:

The federal and state corporate tax rates

The federal and state partnership tax rates

The owners individual federal and state tax rates

15 percent for long-term profits and 30 percent for short-term profits

8.The profits of a business organized as a C-Corporation are taxed at:

The federal and state corporate tax rates

The federal and state partnership tax rates

The owners individual federal and state tax rates

15 percent for long-term profits and 30 percent for short-term profits

9.One of the key advantages of setting a business up as an LLC instead of a sole-proprietorship or partnership is:

An LLC will have its own bank accounts. The sole-proprietorships and partnerships use the owners personal bank accounts

The owners assets are protected from creditors with the LLC structure. With sole-proprietorships and partnerships, creditors can look through to owners assets.

The profits from an LLC are taxed at the lower corporate tax rates. Profits from sole-proprietorships and partnerships are taxed at the higher individual tax rates

LLCs are free from annual tax reporting requirements while sole-proprietorships and partnerships must report their earnings annually

10.Limited liability corporations (LLCs) differ from traditional C-Corporations in which of the following characteristics:

Corporations are designed to be perpetual entities

Corporations can have shareholders

Corporate profits are retained in the corporation. LLC profits are allocated to the owners

All of the above