1.4.1 The Options for Start-Up and Small Businesses

• Small businesses usually focus on rapid expansion and international markets.

  False
• Order the following business structures from simplest to most complex.

  1️⃣ Sole Proprietorship

  2️⃣ Partnership

  3️⃣ Limited Liability Company (LLC)

  4️⃣ Corporation
• What type of liability protection does an LLC provide?

  Limited personal liability
• What is a common funding source for start-ups?

  Venture capital
• Sole proprietorship allows direct profit sharing but has unlimited liability.


  True
• A corporation is owned by shareholders and is a separate legal entity.


  True
• What are the key differences between a start-up and a small business?

  Growth, innovation, market reach, funding
• Match the business structure with its benefit:

  Partnership ↔️ Greater borrowing capacity

  Franchise ↔️ Brand recognition
• What are the main business structures for starting a small business?

  Sole proprietorship, partnership, LLC, corporation, franchise
• An LLC provides limited personal liability but requires a more complex setup compared to sole proprietorships.


  True
• The choice of business structure depends on factors like liability, funding, and operational flexibility.


  True
• Start-ups typically experience rapid and high growth compared to small businesses.

  True
• Start-ups tend to have a wide, international market
• Match the business structure with its key feature:

  LLC ↔️ Limited personal liability

  Corporation ↔️ Enhanced credibility

  Franchise ↔️ Proven business system
• Steps for comparing and contrasting business structures:

  1️⃣ Identify business goals

  2️⃣ Assess liability requirements

  3️⃣ Evaluate funding options

  4️⃣ Consider operational flexibility
• Sole proprietorships offer direct profit sharing but have unlimited liability
• What is a primary benefit of forming a corporation?

  Enhanced credibility
• What is a legal requirement for a sole proprietorship?

  Register the business name
• Steps for forming a corporation

  1️⃣ Register the corporation with the state

  2️⃣ Obtain necessary licenses and permits

  3️⃣ Issue stock

  4️⃣ Hold shareholder meetings

  5️⃣ Maintain corporate records
• Personal and business taxes are filed separately in a sole proprietorship.

  False
• What is a primary advantage of bootstrapping a start-up?

  Full control
• What is a disadvantage of a partnership?

  Potential disagreements
• Match the business structure with its disadvantage:

  Sole Proprietorship ↔️ Unlimited liability

  Partnership ↔️ Shared liability

  LLC ↔️ More complex setup

  Corporation ↔️ Higher compliance costs
• What is a start-up typically characterized by?

  Innovation and rapid growth
• Match the business example with its category:

  Technology start-ups ↔️ Start-up

  Family-run cafes ↔️ Small business
• A partnership increases borrowing capacity due to shared resources and expertise
• A franchise offers a proven business system and brand recognition
• Small businesses typically operate in a local or regional market.
• Corporations have higher setup and compliance costs compared to partnerships.


  True
• A sole proprietorship offers direct profit sharing but comes with unlimited liability
• A corporation offers enhanced credibility and easier access to capital
• What is the primary characteristic of a start-up?

  Rapid growth potential
• Match the funding source with the business type:

  Start-up ↔️ Venture capital

  Small business ↔️ Loans

  Corporation ↔️ Public stock offerings
• Steps for starting a small business using different structures:

  1️⃣ Choose a business structure

  2️⃣ Develop a business plan

  3️⃣ Secure funding

  4️⃣ Register the business

  5️⃣ Obtain necessary permits
• LLCs and corporations offer more liability protection but require greater upfront investment and compliance.

  True
• The choice of business structure depends on factors like funding, liability, and operational flexibility.


  True
• A partnership provides greater borrowing capacity compared to a sole proprietorship.

  True
• Match the business structure with its key consideration:

  Sole Proprietorship ↔️ Unlimited liability

  LLC ↔️ Complex setup

  Corporation ↔️ High compliance costs
• Partnerships must create a partnership agreement outlining roles, profit sharing, and dispute resolution
• What is a primary legal requirement for a franchise?

  Obtain a franchise agreement