The following describe several different business organizations. Determine wheth

Question

The following describe several different business organizations. Determine whether the description refers to a sole proprietorship, partnership, or corporation. A-1 pays its own income taxes and has two owners. Ownership of Zeller Company is divided into 1,000 shares of stock. Waldron is owned by Mary Malone, who is personally liable for the company's debts. Micah Douglas and Nathan Logan own Financial Services, a financial services provider. Neither Douglas nor Logan has personal responsibility for the debts of Financial Services. Bailey and Kay own Squeaky Clean, a cleaning service. Both are personally liable for the debts of the business. Plasto Products does not pay income taxes and has one owner. Ian LLC does not have separate legal existence apart from the one person who owns it.

Explanation / Answer

a. CORPORATION; when a company pays its own income taxes, it is considered to be a separate legal entity (i.e. a corporation) b. CORPORATION; of the three options, only corporations have shares of stock ownership c. PROPRIETORSHIP; in both a proprietorship and a partnership, the owners are personally liable. If there is one owner, it is a proprietorship; more than one is a partnership. d. CORPORATION; although, there are two owners, these owners to not have any personal liability e. PARTNERSHIP; the owners are liable for the debts of the business and there is more than one owner f. PROPRIETORSHIP; the company does not pay income taxes, which means that the income flows through to the owner. Since there is only one owner, it is a proprietorship. g. PROPRIETORSHIP; a corporation has separate legal existence from the person that owns it. Since there is only one owner, it is not a partnership.

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