ESB Practice Exam 1 Questions and Answers (Graded A+)
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Course
ESB
Institution
ESB
What is entrepreneurship? - ANSWER-Setting up a business with the aim to make a profit.
B2B - ANSWER-Purchases requiring a tax exemption certificate; wholesale flooring distributor
B2C - ANSWER-motorcycle repair shop; chain of local grocery stores
S - Corporation - ANSWER-offers many of th...
B2C - ANSWER-motorcycle repair shop; chain of local grocery stores
S - Corporation - ANSWER-offers many of the same benefits as a c corporation, but
better for small businesses. 100 shareholders maximum allowed. all must be US
citizens or residents. shareholders are not personally responsible for business liabilities.
c-corporation - ANSWER-best if the company plans to someday sell stock to the public;
can issue shares to founders, employees, and investors. unlimited owners (aka
shareholders) allowed. shareholders are not personally responsible for business
liabilities. taxed twice - business pays at the corporate level, and shareholders pay on
income received. a separate tax return is required for the business
sole proprietorship - ANSWER-best if you need an easy set-up. you may still need a
dba or business licenses to operate legally, but no other paperwork one owner
maximum. the owner is personally responsible for business liabilities. no personal
liability protection. taxed once - you pay on profits in your personal tax return. separate
tax return not needed
Limited Liability Company (LLC) - ANSWER-popular choice for business concerned
about liability protection. unlimited owners (aka members) allowed. no shareholders. llcs
cannot go public. members are not personally responsible for business liabilities. an llc
can choose how to be taxed by filing form 8832 with the irs. an llc can elect to be taxed
as a sole proprietorship, partnership, s corp, or c corp. an llc is not recognized globally;
ypu may be taxed as a corporation in other countries.
owners of equity - ANSWER-founders, partners, and shareholders
an example of ______ compensation is paying field laborers for the amount of fruit they
pick - ANSWER-piece work
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