Question 1

Nichel designs a new office-management software program and incorpo?rates Nichel's Niche,Inc. ,to make and market it.To sell a limited number of shares of stock to the public,the firm must register the shares with

Accepted Answer

In order to sell shares of stock to the public, a company must register the shares with the Securities and Exchange Commission (SEC) as required by federal securities laws. The SEC regulates the sale of securities to protect investors and ensure that companies provide accurate information about the risks involved in investing. Therefore, registering with the SEC is the best choice for Nichel's Niche, Inc. to sell a limited number of shares of stock to the public.

Question 2

Page opens Quik Xpress,a local delivery service.Unless Page expressly adopts a certain form of business organization,the law considers Quik to be

Accepted Answer

When a business is opened without expressly adopting a certain form of organization, it is automatically considered a sole proprietorship. Therefore, Quik Xpress would be considered a sole proprietorship unless Page chooses to adopt a different form of business organization.

Question 3

Rudy operates Silver Buckles,a small-business equine enterprise.To raise capital,Rudy contacts Thad,a venture capitalist.Besides capital,Thad will most likely

Accepted Answer

Venture capitalists typically provide not only capital but also strategic guidance to help the business grow.

Question 4

Hopper wants to start Ice Rinx as a new business enterprise.Josh is an attorney.Hopper most likely needs to consult Josh because

Accepted Answer

Consulting an attorney like Josh is important for Hopper because keeping up with the laws that govern business conduct can be complex and challenging, and legal guidance can help ensure compliance and avoid legal issues.

Question 5

Payroll Services Company is a small business with ten employees.The regulations of the Occupational Safety and Health Administration exempts

Accepted Answer

The Occupational Safety and Health Administration (OSHA) does not exempt small businesses from its regulations based solely on size. All businesses, regardless of size, must comply with OSHA standards.

Question 6

Elise and Flair are partners in Gourmet Cupcakes,a new general partnership and business enterprise.As general partners,Elise and Flair are subject to liability that is

Accepted Answer

As general partners, Elise and Flair have unlimited personal liability with respect to Gourmet Cupcakes's obligations. This means that their personal assets may be used to satisfy the partnership's debts and obligations.

Question 7

Bro wants to incorporate Chop Shop,a motor vehicle repair business.Incorpora?ting requires filing,with the appropriate state office,

Accepted Answer

Incorporating a business typically requires filing the corporate name with the appropriate state office to ensure it is unique and complies with state regulations.

Question 8

Loudon Machinery,Inc. ,wants to fire its employee Newt,who is an at-will employee.This means that Newt can be fired

Accepted Answer

As an at-will employee, Newt can be fired for any reason or no reason at all.

Question 9

When Flash Flush Company is incorporated in Georgia,the state agency with which the business name is filed approves it as a trade name.This filing will protect the name

Accepted Answer

When a business name is filed with a state agency and approved as a trade name, it only protects the name within that particular state. Therefore, in this scenario, the name "Flash Flush Company" would only be protected within the state of Georgia.

Question 10

B2B,Inc. ,an inventory management firm,is a corporation.Cody is one of B2B's owners-a shareholder.If Cody's dies,B2B

Accepted Answer

The death of a shareholder does not automatically terminate the corporation. The corporation will continue in business as long as there are remaining shareholders or the corporation is dissolved according to the legal procedures.

Question 11

To protect its trade secrets,Gnu Processes,Inc. ,may require employees that have access to the secrets to agree in their employment contracts not to

Accepted Answer

Non-compete agreements are commonly used to prevent employees from working with competitors or starting a competing business, thereby protecting trade secrets.

Question 12

Mountain Valley Winery Corporation's attempt to raise $1 million from a few select inves?tors is

Accepted Answer

A private offering is a type of securities offering in which a company sells securities to a small number of investors. In this case, Mountain Valley Winery Corporation is attempting to raise $1 million from a few select investors, which would fall under the definition of a private offering.

Question 13

Brent's Barber Shop hires only independent contractors such as Christi as workers.This hiring practice allows the employer to avoid all laws governing

Accepted Answer

Independent contractors are not considered employees, so laws governing employment relationships, such as minimum wage and overtime pay, do not apply.

Question 14

Fact Pattern 43-B1 
Jordan and Kacy own and operate Safety Tables,a small-business enterprise that sells adjustable tables that allow workers to safely work with large,heavy,or oddly shaped objects.The enterprise does not pay taxes on its profits,but distributes them to Jordan and Kacy who pay taxes on these amounts as their individual income.Jordan and Kacy's personal liability for Safety Tables's debts and obligations is limited.
-Refer to Fact Pattern 43-B1.Safety Tables is

Accepted Answer

Safety Tables has limited liability for its owners, which suggests that it is not a sole proprietorship or general partnership. The fact that it distributes profits to its owners suggests that it is not a corporation. Therefore, the best choice is a limited liability company (LLC), which offers both limited liability for its owners and pass-through taxation, allowing profits and losses to flow through to the owners' personal tax returns.

Question 15

Mick starts a business to market nationally long-distance phone time as Mick's Minutes.Registering his trademark with the U.S.Patent and Trademark Office provides nationwide protection for the mark

Accepted Answer

The answer of Mick starts a business to market nationally...

Question 16

Fact Pattern 43-B1 
Jordan and Kacy own and operate Safety Tables,a small-business enterprise that sells adjustable tables that allow workers to safely work with large,heavy,or oddly shaped objects.The enterprise does not pay taxes on its profits,but distributes them to Jordan and Kacy who pay taxes on these amounts as their individual income.Jordan and Kacy's personal liability for Safety Tables's debts and obligations is limited.
-Refer to Fact Pattern 43-B1.Safety Tables is ex?empt from legal requirements that relate to

Accepted Answer

The fact pattern does not provide any information indicating that Safety Tables is exempt from any legal requirements. Therefore, the correct answer is "none of the choices."

Question 17

Huck decides to open River Raft Adventures as a tourist service and operate the business as a corporation.At the directors' initial meeting,the directors are most likely to

Accepted Answer

At the initial meeting, directors typically adopt bylaws, which are the rules governing the internal management of the corporation.

Question 18

Joy and Kersey want to open a magic and novelty shop as Jo-Kers,with a plan to open other shops in the future.To attain limited li?ability for the lowest cost and the fewest start-up formalities,their best op?tion is to form

Accepted Answer

Forming a limited liability company (LLC) would provide Jo-Kers with limited liability protection, meaning their personal assets would be separate from their business assets and protected in the event of any legal or financial issues. Additionally, creating an LLC typically involves fewer start-up formalities and lower costs compared to incorporating. A limited partnership (option C) may also provide limited liability protection, but requires at least one general partner who has unlimited personal liability. A sole proprietorship (option D) is not recommended as it does not provide any limited liability protection, and the business and personal assets are not separate.

Question 19

Lee wants to begin importing athletic shoes under the corporate name Mercury,Inc.Mercury should include most of its corporate rules in

Accepted Answer

The bylaws typically include the corporate rules and procedures for the board of directors, officers, and shareholders. The articles of incorporation and corporate charter primarily establish the basic details of the corporation, such as its name, purpose, and capital structure. The minutes of the first meeting of the board of directors may document decisions made by the board, but they do not generally include the corporate rules themselves.

Question 20

Price and Quint are starting a small machine shop-Riverside Boat Repair-and are considering whether to organize the business as a lim?ited liability partnership.This form

Accepted Answer

A limited liability partnership limits the personal liability of its owners for business obligations. This means that the owners' personal assets are protected from any business debts, lawsuits, or other financial obligations incurred by the business.

Quiz 43: A: Law for Small Business