Business Structures Quiz

What is the purpose of choosing a business structure?

• To test a business in a low-risk environment

• To provide personal asset protection

• To add credibility to the business

• To save money on taxes

Which of the following is an informal business structure?

• LLC

• Corporation

• Sole proprietorship

• Partnership

What is a disadvantage of informal business structures?

• Lack of asset protection

• Complex paperwork

• Double taxation

• Limited credibility

Which business structure is recommended for small businesses?

• LLC

• Corporation

• Sole proprietorship

• Partnership

What is the default tax status for an LLC?

• Pass-through

• S-Corp

• C-Corp

• Disregarded entity

Which business structure provides personal asset protection?

• Sole proprietorship

• Partnership

• LLC

• Corporation

What is a benefit of formal business structures?

• Simplicity in formation

• Pass-through taxation

• Increased credibility

• Low-risk environment

Which business structure is suitable for rapid growth and unfamiliar customers?

• Sole proprietorship

• Partnership

• LLC

• Corporation

What is a disadvantage of corporations?

• Lack of asset protection

• Complex paperwork

• Double taxation

• Limited credibility

Which business structure is recommended for raising money from venture capital?

• LLC

• Corporation

• Sole proprietorship

• Partnership