Which of the following statements is/are true?
1. It is necessary to register with the state when forming a proprietorship.
2. It is necessary to register with the state when forming a partnership.
a. 1 only.
b. 2 only.
c. Both 1 and 2.
d. Neither 1 nor 2.
I believe the answer is B if somebody could please help me.
To determine whether the given statements are true or false, we need to understand the registration requirements for different types of business entities.
1. Statement 1: It is necessary to register with the state when forming a proprietorship.
- A proprietorship is an unincorporated business owned and operated by a single individual. Generally, no formal registration is required to establish a proprietorship. However, depending on the jurisdiction, you may need to obtain local permits or licenses to operate the business legally. Therefore, statement 1 is false.
2. Statement 2: It is necessary to register with the state when forming a partnership.
- A partnership is a business entity formed by two or more individuals who agree to share profits and losses. While partnerships do not have to file formal registration documents at the state level, they often need to file a partnership agreement with the state or county or record it with a local clerk's office. This document is not for registration purposes but for the purpose of establishing the partnership's existence and its terms. Therefore, statement 2 is true.
Based on this information, the correct answer is (b) 2 only.