2. Forms of business organizations Aa Aa Businesses can be classified into the following forms: a proprietorship, a partnership, a corporation, a limited liability company (LLC), and a limited liability partnership (LLP) Different forms of businesses have different characteristics. Which of the following characteristics would apply to a partnership? Check all that apply X Chartered by a state and is its own entity separate from its owners Income is allocated on a pro rata basis X Legal arrangement between two or more people X Taxed at individual level X Can easily raise large amounts of capital Subject to unlimited liability You come across different kinds of businesses every day. The following table describes some businesses. Using the description of each business, classify it as a proprietorship, a partnership, a corporation, or a limited liability company/limited liability partnership Business Scenario Type of Business LLC/LLP Paradigm Media is a company run by a group of new media professionals. The owners of the company do not have any personal liability and file taxes based on individual income Daniel started a tutoring website. After a few months, a publishing company filed a lawsuit against his company for copyright infringement. Daniel had to shut down his business and lost all his personal assets in the process Purple Consulting has five consultants in the firm. The company's annual revenue is around $500,000. Income is distributed among all consultants, and each is personally liable for claims if the company goes under Rock Inc. is a mineral mining company. The CEO of Rock Inc. recently died. The news led to a short-term decline in the company's stock price, but it bounced back after the company announced its quarterly earnings Proprietorship Partnership Corporation Businesses in the form of corporations offer their owners several advantages, but the benefits come at a price. For instance, corporations are required to create a charter, set bylaws, and file mandatory reports with state and federal authorities, which can get expensive and time consuming The filing document, which requires the company to state: (1) the name of the proposed corporation, (2) types of activities the company will be involved in, (3) amount of capital stock, (4) number of directors, and (5) names and addresses of the directors, is called the corporate bylaws bylaws charter