Legal and Business Structure Flashcards
6 cards from real Entrepreneurship practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Legal and Business Structure flashcards as text
What is a sole proprietorship?
Answer: A business owned and operated by a single individual with no legal distinction between owner and business
A sole proprietorship is the simplest business structure, where the owner and the business are legally the same entity, making the owner personally liable for all debts.
What is the main advantage of forming an LLC (Limited Liability Company)?
Answer: Personal liability protection for the owner's assets separate from business debts
An LLC protects the owner's personal assets from business liabilities, while offering flexible tax treatment and simpler governance than a corporation.
What is an S corporation?
Answer: A pass-through tax entity that avoids double taxation while providing liability protection
An S corporation passes corporate income, losses, and deductions through to shareholders' personal tax returns, avoiding the double taxation of a C corporation.
What is a partnership agreement?
Answer: A legal document outlining the rights, responsibilities, and profit sharing of business partners
A partnership agreement is a legal contract that defines each partner's contributions, ownership percentage, decision-making authority, and procedures for dispute resolution.
What is a trademark?
Answer: A symbol, name, or phrase legally registered to distinguish a company's goods or services
A trademark legally protects brand identifiers—logos, names, slogans—giving the owner exclusive rights to use them in commerce and preventing consumer confusion.
What is an employer identification number (EIN)?
Answer: A federal tax ID number assigned by the IRS to identify a business entity
An EIN is a unique nine-digit federal tax identification number the IRS assigns to businesses for tax reporting purposes.