Please help me....
Match the example in Column A to the business structure in Column B.
1.) Doug and Vanessa are friends who want to start a carpet cleaning business together and share the ownership and profits. They are not concerned about personal liability. They want the business to be fairly simple to set up.
2.) Esperanza is starting a business by herself as an illustrator for magazines and children's books. She isn't concerned with personal liability, but she wants the business to be easy to set up.
3.) Robyn wants to turn her sole proprietorship as a tutor into a larger company with many owners and liability protection. She is willing to deal with double taxation and a complicated setup process.
4.) Cuba is starting an event planning company. He wants to protect his liability, and he would prefer pass-through taxation.
5.) Ming is starting a business with the purpose of fighting hunger in her community. She doesn't care about making a profit and is willing to reinvest any income back into the corporation.
A.
C corporation
B.
Nonprofit corporation
C.
Partnership
D.
Sole proprietorship
E.
S corporation or LLC
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acbed
1.) Doug and Vanessa are friends who want to start a carpet cleaning business together and share the ownership and profits. They are not concerned about personal liability. They want the business to be fairly simple to set up.
Answer: C. Partnership
2.) Esperanza is starting a business by herself as an illustrator for magazines and children's books. She isn't concerned with personal liability, but she wants the business to be easy to set up.
Answer: D. Sole proprietorship
3.) Robyn wants to turn her sole proprietorship as a tutor into a larger company with many owners and liability protection. She is willing to deal with double taxation and a complicated setup process.
Answer: A. C corporation
4.) Cuba is starting an event planning company. He wants to protect his liability, and he would prefer pass-through taxation.
Answer: E. S corporation or LLC
5.) Ming is starting a business with the purpose of fighting hunger in her community. She doesn't care about making a profit and is willing to reinvest any income back into the corporation.
Answer: B. Nonprofit corporation
To match the examples in Column A to the business structures in Column B, let's go through each example and consider the characteristics mentioned:
1.) Doug and Vanessa want to start a carpet cleaning business together, share ownership and profits, and are not concerned about personal liability. They also want the business to be fairly simple to set up.
This example describes a partnership. In a partnership, two or more individuals join together to run a business and share ownership, profits, and liabilities. Partnerships are generally easy to set up and provide flexibility for the partners.
2.) Esperanza is starting a business as an illustrator for magazines and children's books. She is not concerned about personal liability but wants the business to be easy to set up.
This example describes a sole proprietorship. A sole proprietorship is the simplest and most common form of business structure, where an individual operates a business as the sole owner. It is easy to set up and provides the owner with full control and responsibility for the business, including liabilities.
3.) Robyn wants to convert her sole proprietorship tutoring business into a larger company with multiple owners and liability protection. She is willing to deal with double taxation and a complicated setup process.
This example describes a C corporation. A C corporation is a separate legal entity from its owners, offering limited liability protection to the owners. It allows for multiple ownership and significant growth potential. However, it is subject to corporate income tax, which results in potential double taxation.
4.) Cuba is starting an event planning company and wants to protect his liability while preferring pass-through taxation.
This example suggests an S corporation or LLC (Limited Liability Company). Both options provide limited liability protection while allowing pass-through taxation, where the profits and losses pass through to the owners' personal tax returns. The choice between S corporation and LLC depends on various factors, such as the number of owners and the business's specific needs.
5.) Ming is starting a business aiming to fight hunger in her community. She does not care about making a profit and is willing to reinvest any income back into the corporation.
This example matches a nonprofit corporation. Nonprofit corporations are formed for charitable, educational, or other specific purposes and are not designed to generate profits. They reinvest their income into fulfilling their mission rather than distributing profits to owners or shareholders.
Therefore, the matching would be:
1.) C. Partnership
2.) D. Sole proprietorship
3.) A. C corporation
4.) E. S corporation or LLC
5.) B. Nonprofit corporation