1.5.4 Forms of Business

• What is an entrepreneur?

  Someone who starts a business
• An entrepreneur takes the risk to start and manage a new business venture.
• Entrepreneurs must accept potential financial and personal sacrifices.
• What is a leader in a business context?

  Someone who motivates others
• A key characteristic of a leader is having a clear vision for the business.
• Effective leaders communicate information and feedback clearly.
• Match the characteristic with its description for a sole proprietorship:

  Ownership ↔️ One person owns and manages the business

  Liability ↔️ Unlimited personal liability

  Capital ↔️ Owner's personal funds or small loans
• In a sole proprietorship, the owner has unlimited personal liability.
• What is a partnership in business?

  A business with two or more owners
• Partners in a partnership share financial risk.
• One disadvantage of a partnership is the potential for conflict between partners.
• What does LLC stand for?

  Limited Liability Company
• The operating agreement in an LLC outlines member responsibilities and profit distribution.
• A limited liability company combines the simplicity of a partnership with the liability protection of a corporation
• What are the owners of an LLC called?

  Members
• An operating agreement outlines member responsibilities and profit distribution in an LLC
• In an LLC, management can be either member-managed or manager-managed, depending on the operating agreement
• Match the component of an LLC with its description:

  Members ↔️ Individuals or entities who own the LLC

  Operating Agreement ↔️ Contract outlining roles and responsibilities

  Management ↔️ Member-managed or manager-managed
• What type of liability do LLCs provide to protect personal assets?

  Limited liability
• An entrepreneur is someone who avoids taking risks in business ventures

  False
• One key characteristic of an entrepreneur is opportunity recognition
• Who is an example of an entrepreneur mentioned in the study material?

  Steve Jobs
• A leader's role includes motivating others towards a common goal
• A leader's vision involves setting clear goals and strategies
• Match the leadership characteristic with its description:

  Motivation ↔️ Inspires and encourages team members

  Communication ↔️ Effectively conveys information

  Adaptability ↔️ Adjusts plans as circumstances change
• What type of liability does a sole proprietorship have?

  Unlimited personal liability
• A sole proprietorship is owned and managed by a single person
• The setup process for a sole proprietorship is simple
• How many individuals are required to form a partnership?

  Two or more
• Partnerships have limited personal liability

  False
• What is one disadvantage of a partnership mentioned in the study material?

  Limited capital raising
• An LLC combines the simplicity of a partnership with the liability protection of a corporation
• What is a limited liability company (LLC)?

  A business structure combining simplicity with limited liability
• An LLC combines the simplicity of a sole proprietorship with the limited liability protection of a corporation
• Who are the owners of an LLC?

  Members
• An operating agreement outlines the roles and responsibilities of LLC members.
• LLC management can be either member-managed or manager-managed.
• How does an LLC differ from a sole proprietorship or partnership?

  It provides limited liability
• Match the type of corporation with its description:

  S corporation ↔️ Passes profits to owners for tax purposes

  C corporation ↔️ Taxed as a separate entity

  Nonprofit corporation ↔️ Focuses on community service

  Public corporation ↔️ Offers shares to the public
• What is an example of a C corporation?

  Ford Motor Company