WWU MGMT 271 Final exam with answers
General requirements of starting a business - -1. Business Plan/Marketing Plan
2. Location, address, contact info
3. Determine best organization type
4. Research city requirements, licenses, inspections
5. Obtain EIN from IRS
6. Obtain master business license
7. Business banking
8. Insurance
9. Taxes
-Business organization - -Legally recognized business form under which a business
operates
-Main factors for choosing type of business organization - -1. Legal status in relation to
ownership
2. Creation
3. Control and compensation
4. Liability
5. Taxation
6. Duration
-Sole porpietorship - -1. No legal distinction between business and owner
2. Easy to create with new formalities
3. Can use own name or a trade name
4. Control and compensation
5. Liability
6. Taxation
7. Duration
-Control and compensation - -Owner has complete control of the business, compensation
comes from profits
-Liability - -is directly with the owner and unlimited
-Taxation - -Owner is taxed on income generated
-Duration - -is until the owner dies, retires or transfers ownership. Debt remains with the
owner unless creditors agree to a release from liability
-Partnerships - -1. Composed of two or more persons who contribute to the business
2. Partners share profits, losses, and management of the business. Each person is equally
liable for debts
3. Revised uniform partnership act
, 4. Partnership is a contractual relationship, and the three methods of creating a contract
apply
-Revised Uniform Partnership Act - -Regulation of partnership businesses
-Express partnership - -Partners expressly agree to form a partnership, this should be in
writing but is not required
-Impliedly - -Two or more persons conduct business together to meet the definition of
partnership. sharing profits is evidence
-Estoppel/Apparent - -When it appears that a person is a partner, whoever created the
apparent partner may be prevented form denying the partnership relationship, if a third
party reasonably an detrimentally relied on the representation
-Partnership control and compensation - -Control is mutual and equal in the scope of
business, compensation is from profits everything is equally shared
-Partnership Liability - -All partners are liable for tort liabilities incurred in the scope of
business and they are contractually bound
-Partnership Taxation - -Partners pay taxes based on income
-Partnership Duration - -May be for fixed or indefinite term
-Limited Partnership - -Composed one or more general partners and one or more limited
partners
-Genreal partners - -Manage the business and share profit and losses
-Limited partners - -1. share profits but their losses are limited to the extend of their
investment
2. Are not usually involved in the day to day
3. Must file a certificate of limited partnership
4. Must contain words limited partnership
5. No liability for limited partners if they are not actively running the business
-Corperations - -A corporation has certain rights, privileges, and liabilities beyond those of
an individual. It is a separate legal entity from the owners. Doing business as a corporation
may yield tax or financial benefits, but these can be offset by other considerations, such as
decreased personal control
-Corporation creation - -Files articles of incorporation
-Capitalization - -Equity financing and debt financing
General requirements of starting a business - -1. Business Plan/Marketing Plan
2. Location, address, contact info
3. Determine best organization type
4. Research city requirements, licenses, inspections
5. Obtain EIN from IRS
6. Obtain master business license
7. Business banking
8. Insurance
9. Taxes
-Business organization - -Legally recognized business form under which a business
operates
-Main factors for choosing type of business organization - -1. Legal status in relation to
ownership
2. Creation
3. Control and compensation
4. Liability
5. Taxation
6. Duration
-Sole porpietorship - -1. No legal distinction between business and owner
2. Easy to create with new formalities
3. Can use own name or a trade name
4. Control and compensation
5. Liability
6. Taxation
7. Duration
-Control and compensation - -Owner has complete control of the business, compensation
comes from profits
-Liability - -is directly with the owner and unlimited
-Taxation - -Owner is taxed on income generated
-Duration - -is until the owner dies, retires or transfers ownership. Debt remains with the
owner unless creditors agree to a release from liability
-Partnerships - -1. Composed of two or more persons who contribute to the business
2. Partners share profits, losses, and management of the business. Each person is equally
liable for debts
3. Revised uniform partnership act
, 4. Partnership is a contractual relationship, and the three methods of creating a contract
apply
-Revised Uniform Partnership Act - -Regulation of partnership businesses
-Express partnership - -Partners expressly agree to form a partnership, this should be in
writing but is not required
-Impliedly - -Two or more persons conduct business together to meet the definition of
partnership. sharing profits is evidence
-Estoppel/Apparent - -When it appears that a person is a partner, whoever created the
apparent partner may be prevented form denying the partnership relationship, if a third
party reasonably an detrimentally relied on the representation
-Partnership control and compensation - -Control is mutual and equal in the scope of
business, compensation is from profits everything is equally shared
-Partnership Liability - -All partners are liable for tort liabilities incurred in the scope of
business and they are contractually bound
-Partnership Taxation - -Partners pay taxes based on income
-Partnership Duration - -May be for fixed or indefinite term
-Limited Partnership - -Composed one or more general partners and one or more limited
partners
-Genreal partners - -Manage the business and share profit and losses
-Limited partners - -1. share profits but their losses are limited to the extend of their
investment
2. Are not usually involved in the day to day
3. Must file a certificate of limited partnership
4. Must contain words limited partnership
5. No liability for limited partners if they are not actively running the business
-Corperations - -A corporation has certain rights, privileges, and liabilities beyond those of
an individual. It is a separate legal entity from the owners. Doing business as a corporation
may yield tax or financial benefits, but these can be offset by other considerations, such as
decreased personal control
-Corporation creation - -Files articles of incorporation
-Capitalization - -Equity financing and debt financing
