9. Sole Proprietorships are by far the most common form of business entity for new businesses. What are the reasons most often cited by the owners for choosing this form of business entity? They are:
a. Easy to form, cheap to form, and quick to form.
b. Easy to form, safest legally, and cheap to form.
c. Cheap to form, easy to file taxes on profits, and easy to get investors.
10. True or False. General Partnerships are easy to form many are set up with just a handshake agreement between two partners!
11. Ben and Jerry decide to go into the ice-cream business, selling their products out of an ice-cream truck at the local beach. They have a handshake agreement to split their profits equally. However, nothing is said about losses, because they both assume that they will make large profits! Ben puts up $10,000 in cash, and Jerry contributes a truck that cost him $20,000. Unfortunately, one batch of their ice-cream was made with milk that had spoiled. One of their customers got very sick from e-coli bacteria poisoning from their product, and is now in the local hospital with major permanent damage to several internal organs! Her attorney has contacted Ben and Jerry to let them know that the customer has filed a million dollar lawsuit against them, just to cover her medical bills and lost wages. Ben has no other assets. Jerry has a stock portfolio of $500,000 that he had inherited from his mom. Assuming the customer is successful with her claim in court, and gets a judgment for $500,000 against Ben and Jerry: a. Jerry will lose his entire stock portfolio to the customer. He will have to go after Ben to try to get reimbursed for Bens share of the judgment. b. Jerry will only have to pay $250,000 to the customer. The customer will have to go after Ben to try to get the other half of the judgment paid.
12. If a new-business owner wants to be protected against lawsuits against the business, and personal liability forother debts of the business, she should: a. set up the business as a sole proprietorship b. set up the business as a general partnership with a partner c. set up the business as an LLC or Corporation
13. In California, about how much does a typical new small-business owner have to pay the state, to set up an LLC, to get limited liability protection? You may want to check with the California Secretary of State Business Entities Section: https://www.sos.ca.gov/business-programs/business-entities
and this website set up by a private company: https://www.llcuniversity.com/california-llc/
and this website set up by LegalZoom: https://www.legalzoom.com/articles/the-cost-of-forming-an-llc-in-california#:~:text=An%20LLC%20is%20formed%20in,and%20pay%20a%20%2420%20fee
a. $70 filing fee, and $200 annual franchise tax b. $70 filing fee, and $800 annual franchise tax c. $70 filing fee, and $2,000 annual franchise tax
14. True or False. Most crimes are defined with both a wrongful act (the actus reus), and also a criminal state of mind (the mens rea).
15. True or False. With a crime, there is a governmental unit (like the US or a state) that is always the party that files the case against the criminal defendant.
16. True or False. With both crimes and torts, the defendant can be ordered to jail.
17. True or False. The level of proof that is required to win against a civil tort defendant is beyond a reasonable doubt that the defendant did the wrongful act.
18. The United States government charged Marty with the murder of a US Forest Service Ranger. There was a jury trial that decided the case, and the jury voted to acquit Marty of the crime he was charged with. The jury did not feel that the government prosecutors had presented enough evidence to convince them that Marty was the person who had committed this crime. Marty was released by the judge. One year later, the prosecutors came upon some additional evidence that they think absolutely proves that Marty did the murder. a. under the 4th Amendment to the US Constitution, the government is prohibited from charging Marty with this crime again. b. under the 5th Amendment to the US Constitution, the government is prohibited from charging Marty with this crime again. c. under the 8th Amendment to the US Constitution, the government is prohibited from charging Marty with this crime again.
