Business Plan Legal & Organizational Structure

Question 1

What is a sole proprietorship?

Accepted Answer

A business owned and operated by one individual with no legal separation from the owner

Answer

A business owned by two or more partners

Answer

A corporation with a single shareholder

Answer

A non-profit organization

Question 2

What is a Limited Liability Company (LLC)?

Accepted Answer

A hybrid business structure combining corporate liability protection with partnership tax flexibility

Answer

A business structure where owners have unlimited liability

Answer

A type of government-owned company

Answer

A franchise agreement structure

Question 3

What is the difference between a C-Corp and an S-Corp?

Accepted Answer

C-Corps face double taxation and can have unlimited shareholders; S-Corps pass taxes to shareholders and have limits on share structure

Answer

C-Corps are non-profits; S-Corps are for-profits

Answer

They are legally identical

Answer

S-Corps can be publicly traded; C-Corps cannot

Question 4

What does 'articles of incorporation' establish?

Accepted Answer

The legal formation of a corporation, including name, purpose, and share structure

Answer

The company's marketing strategy

Answer

A partnership agreement between founders

Answer

A patent application

Question 5

What is a partnership agreement?

Accepted Answer

A legal document defining the rights, responsibilities, profit sharing, and decision-making of business partners

Answer

A customer service contract

Answer

A vendor supply contract

Answer

A government licensing form

Question 6

What is an operating agreement for an LLC?

Accepted Answer

An internal document defining ownership percentages, member roles, and operating procedures for an LLC

Answer

A product manufacturing contract

Answer

A tax filing document

Answer

A lease agreement for business premises