Sole Proprietorship
a business that is owned (and usually operated) by one person
What is a sole proprietorship?
a voluntary association of two or more persons to act as co-owners of a business for profit
What is a partnership?
is an artificial person created by law, with legal rights
What is a corporation?
a distribution of earnings to the stockholders of a corporation
What is a dividend?
the shares of ownership of a corporation
What are stock?
a legal concept that holds a business owner personally liable for all of a business’s debts
What is unlimited liability?
ease of start-up, availability of capital and credit, personal interest, combined business skills and knowledge
What are advantages of partnerships?
the people who own a corporation's stock, and thus own a part of the corporation
Who are stockholders (aka shareholders)?
a legal form listing issues to be decided and enabling stockholders to transfer their voting rights to some other individual or individuals
What is a proxy?
a corporation whose stock is owned by relatively few people and is not bought and sold on security exchanges
What is a closed corporation?
The reason a person would change from a sole proprietorship to a partnership or corporation
To grow as a business and make more money
a person who contributes capital to a business but who has no management responsibility or liability for losses beyond his/her investment
What is a limited partner?
a corporation whose stock is sold to the general public and can be purchased by any individual
What is an open corporation?
the chairman of the board, president, executive vice presidents, corporate secretary, treasurer, and any other top executives) are appointed by the board of directors
Who are corporate officers?
a feature of corporate ownership that limits each owner's financial liability
what is limited liability?
Ease of start-up and closure, pride of ownership, retention of all profits, no special taxes, flexibility of being your own boss
What is an advantage of a sole proprietorship?
a person who assumes full or shared responsibility for operating a business
What is a general partner?
an incorporated business is called this type of corporation in the state in which it is incorporated
What is a domestic corporation?
corporations pay a tax on their profits and stockholders pay a personal income tax on dividends
What is double taxation?
these owners usually have no voting rights, but their claims on dividends are paid before those of common-stock owners
What is preferred stock?
Unlimited liability, lack of continuity, lack of money, limited management skills, difficulty hiring
What is a disadvantage of sole proprietorships?
an agreement listing and explaining the terms of the partnership
What is a partnership agreement?
is the top governing body of a corporation
What is the board of directors?
the combining of two corporations or other business entities to form one business
What is a merger?
an agreement between two or more groups to form a business entity in order to achieve a specific goal or to operate for a specific period of time
What is a joint venture?