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BMAL 590 Legal Environment of Business Questions and Answers 100% Correct
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BMAL 590 Legal Environment of Business Questions and Answers 100% CorrectBMAL 590 Legal Environment of Business Questions and Answers 100% CorrectBMAL 590 Legal Environment of Business Questions and Answers 100% CorrectBMAL 590 Legal Environment of Business Questions and Answers 100% Correct

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  • November 1, 2024
  • 10
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • bmal 590 legal environment of business questions a
  • bmal 590 legal environment of business answers
  • business organizations answer sole trader partn

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  • BMAL 590 Legal Environment of Business
  • BMAL 590 Legal Environment of Business

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BMAL 590 Legal Environment of
Business Questions and Answers 100%
Correct
Business organizations: - ANSWER-Sole trader
Partnership
Company
Franchise

Sole trader - ANSWER-Ownership and control of business: by one owner

Partnership - ANSWER-Ownership: by partners
Control of business: by partners although senior partners may have more decision
making power

Company - ANSWER-Ownership: shareholders
Control of business: by directors and paid managers. Some will have more control.

Franchise - ANSWER-Ownership: franchisee holds license but only for a given period
Control of business: franchisee but must operate in framework set out by franchisor.

Sole Proprietorship - ANSWER-This is the simplest and also the most prevalent form of
business in the United States.

As the name implies, in a sole proprietorship, one individual owns all the assets and is
responsible for all liabilities - debt, contracts, and tort liabilities.

The proprietor is the business. The business is not different from the proprietor.

If the business has to be conducted in a name other than that of the proprietor, the
name must be registered with the appropriate state authority.

A sole proprietorship ceases to exist when the proprietor decides to wind up the
business, or on the death of the proprietor, whichever is earlier.

Advantages of Sole Proprietorship - ANSWER-Easy and simple to set up.
One person is in control.
Only one level of income tax - proprietor reports income and loss on personal returns.
Proprietor receives all the profits and other benefits.

limitations of sole proprietorship - ANSWER-Proprietor is personally liable for business
obligations. The risk is high.

, Difficult to raise capital. Can borrow from relatives and friends and from institutions as
an individual.

General Proprietorship - ANSWER-Two or more persons agree to invest their money,
time, and skills in a business, and to share the profits/losses. Essentially, a GP is sole
proprietorship with multiple proprietors. Thus, the partners are personally liable for all
partnership obligations.

The partnership agreement may be explicit or implied, but sharing of profit/loss must be
real. In other words, partners cannot merely receive wages or salaries.

Unless specified otherwise, each partner has some authority and a corresponding
responsibility.

A partnership exists as an entity by itself and separate from its partners. It can acquire
property.

Advantages of General Proprietorship - ANSWER-Allows for a range of possibilities in
ownership and sharing.

One partner may invest money, another may provide space, and a third may provide
expertise. Yet, they may be equal partners.

Subject to only one level of tax - that of the individuals who are partners.

From a tax perspective, a partnership is a pass-through entity.

Does not necessarily terminate on the death, resignation, and even bankruptcy of a
partner. Other partners can decide to continue.

Limitations of General Proprietorship - ANSWER-Individual partners are personally
liable, just as in a proprietorship.

When the partnership cannot repay its debts, honor its contracts, or fulfill its tort
liabilities, aggrieved parties can proceed against the partners in their individual capacity.

A partnership too faces difficulty in raising capital.
Thus, the opportunities for growth may be limited by the ability of the partners to invest.

Joint Venture - ANSWER-A one-time partnership between two or more persons for a
specific purpose.

The parties to the joint venture should have a common interest, have the right to
govern, share in the venture's profits/losses, and be willing to contribute money, time,
and/or skill for the success of the venture.

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