4. What is a closely-held corporation?

A business with a large number of shareholders

A business formed by the government

A business with a small number of shareholders

A business formed to assist experts in a particular business field

5. Albus wants to build a business. He wants to start the business fast and reach a large customer base, but he only has a small amount of opening capital. He has no partner with whom to form the business. Which of the following is not a valid reason for Albus to choose a sole proprietorship organization for his business?

Has no partner with whom to form the business.

Small amount of capital

Wants to start the business fast

Wants to reach a large customer base

6. Which of the following is false concerning LLCs?

LLC owners are called members.

LLCs are formed in much the same way as a general partnership.

LLCs are governed by state statute.

LLCs can be taxed as corporations.

7. Tawny wants to be involved in a business. She has lots of capital to invest and she wants to be involved in management, but does not want to be exposed to personal liability for losses the business might incur and she does not want to have to pay excessive taxes on her gains. Which form of business would be best for Tawny?

LLC

Corporation

General partnership

Sole proprietorship

8. Kim wants to be involved in a business but is not sure what type of business to join or create. She has some capital to invest, several years of managing experience, and a good network of potential investors and partners. What role would be best for Kim?

General partner in a general partnership

General partner in a limited partnership

Limited partner in a limited partnership

More than one possible option