Final Exam — How to Start an LLC — Fluent Collective Courses

10 questions, 15 minutes, 7 to pass. This tests whether the core concepts stuck — not memorization, judgment. Good luck.

1. What's the primary reason to form an LLC instead of staying a sole proprietor?

Lower taxes automatically for the owner Separating personal assets from business liability Avoiding all paperwork and annual filings Getting approved for a business loan

2. You're a freelancer living in Texas with all clients in Texas. Where should you most likely file?

Delaware, because big companies do Texas, your home state Nevada, for privacy Wyoming, because it's cheapest

3. What is a registered agent?

The attorney who represents your business in court The person/service designated to receive legal documents for your LLC The state employee who reviews and approves your filing The accountant who keeps your business books

4. How much does an EIN cost from the IRS?

$275 a year $99 one-time It's free $500 per filing

5. You paid for business supplies with your personal credit card and never reimbursed yourself. What risk does this create?

None — it's your money either way Commingling, which can pierce your liability protection Higher taxes Automatic S-corp election

6. What's an operating agreement for?

Filing your formation paperwork with the state Spelling out ownership and how decisions get made Getting a business license from your city Opening a business bank account for the LLC

7. Your state requires an annual report. You forget to file it for two years. What can happen?

Nothing happens — filing it is optional The state can administratively dissolve your LLC Your EIN gets revoked by the IRS You owe double federal taxes that year

8. When does an S-corp election start making sense?

Immediately for every LLC, from the day it first forms When profits are high enough that the payroll tax savings beat the extra costs Only for corporations — an LLC can never elect it Never — the paperwork always costs far more than it saves

9. You formed your LLC but never opened a separate bank account. What's the problem?

There's no problem You're commingling funds, undermining your liability protection You'll pay higher state fees Your LLC is automatically dissolved

10. A client sues your properly-maintained LLC over a contract dispute. What's generally at risk?

Everything you own personally Only the LLC's assets Your personal savings plus the business Nothing — lawsuits can't touch LLCs

Final Exam: How to Start an LLC