Business law quiz
1. True or False: You can make an enforceable oral agreement to guarantee someone else's debt.
2. True or False: A privately-owned company that conducts a very small business generally will not be required to file annual statutory accounts with Companies House.
3 True or False: A general partnership must have a written partnership agreement, and if it does not it will be deemed to be an unincorporated association.
4. An employer must give a new employee a written memorandum of employment terms:
a. prior to the date the new employee begins work;
b. within two months of the date the new employee begins work;
c. prior to the first time the new employee is paid for his services; or
d. within 30 days of receipt of a written request from the new employee.
5. Which of the following cannot give a lender a debenture with a fixed and floating charge to secure a loan:
a. a PLC;
b. a limited liability partnership;
c. a limited partnership; or
d. a limited company with a single shareholder.
6. True or False: Most sales of goods and services to a purchaser who is outside the European Union are zero-rated for VAT purposes.
7. True or False: If your business produces and sells only goods that are exempt from VAT, you can get a refund of any VAT that you pay on purchasing supplies for the business.
8. Which of the following statements are false:
a. as an employer, you and your employee can jointly elect to have an employee pay employee National Insurance contributions directly rather than by the PAYE system;
b. as an employer you must deduct taxes from an employee's earnings under PAYE if the employee's wages are greater than the PAYE threshold;
c. a business with earnings under the VAT threshold is also exempt from the PAYE system;
d. an employer must itself pay employer's Class 1 National Insurance contributions even though it collects National Insurance contributions from its employees under PAYE.
9. A company with taxable profits of £1.5 million or less must pay its corporation tax:
a. in periodic instalments;
b. by the end of the accounting period in which the profits are earned;
c. within 9 months after the end of each corporation tax accounting period;
d. within 30 days of filing its statutory accounts.
10. True or False: An employment contract must be in writing.
11. A limited liability partnership (LLP) must have:
a. at least 5 partners;
b. a partnership secretary;
c. at least two "designated partners";
d. a managing partner.
12. True or False: A limited partnership is the same as a limited liability partnership.
1. False. A surety (which includes a guarantee) must be in writing. The Statute of Frauds (originally enacted by Parliament in 1677) requires that certain contracts must be in writing -- amongst them, contracts for surety.
2. False. All companies must file statutory accounts with Companies House, although small and medium sized companies are permitted to file less extensive accounts than larger companies. In addition, very small companies (and dormant/inactive companies) may file unaudited accounts.
3. False. A partnership agreement can be an oral agreement -- although it is ordinarily good practice to have a written partnership agreement, signed by each of the partners.
7. False. A business can reclaim VAT on inputs against sales of zero-rated or reduced-rate goods and services, but not against sales that are exempt from VAT.
8. Both a. and c. are false. In relation to a., an employer is required to collect an employee's National Insurance contributions by way of the PAYE system. In relation to c., there is a (very low) pay threshold for the PAYE system, and it is unrelated to the VAT threshold.
10. False. An employment contract is created when an employee unconditionally accepts an offer of employment. It does not have to be in writing. It can be an oral agreement, or even an agreement that is implied by the parties' contract.
12. False. Despite the somewhat confusing similarity of their names, a limited partnership and a limited liability partnership are very different types of partnerships. A limited partnership must have at least one general partner, whose liability for partnership debts is unlimited. All of the partners in a limited liability partnership have limited liability -- there is no general partner. Limited liability partnerships are required to file statutory accounts with Companies House, whereas limited partnerships are not required to do so. There are a number of other differences between the two.