Sole Proprietorships
The most attractive feature of this business is the ease of
What is starting/stopping
A disadvantage of this business type is that they have difficulty raising this
What is financial capital (money)
Discuss how a for-profit corporation is taxed:
C- corps- double taxed
S - corps - taxed like a partnership - flow through entity
The document that needs to be filed with the state in order to create a corporation.
What are the Articles of Incorporation.
This type of business involves an arrangement between an owner of a trade name or trademark and a person who sells goods or services under the trade name or trade mark.
What is a Franchise -
Franchisor - licenses use of trade name or trademark
Franchisee - sells the goods under the trade name or trade mark under a license.
A business failure results in the owner losing their house, cars, and other personal property. This is referred to as
What is unlimited liability
The most important factor in determining whether a partnership exists.
Sharing of the profits
This business type continues on long after the founder dies. This is referred to as
What is unlimited life - perpetual life
The failure of a corporation to hold annual meetings could result in a court
Piecing the Corporate Veil.
To form a limited liability company, what document must be filed with the state?
What are the articles of organization
When the sole proprietor dies this happens
The sole proprietorship terminates
A type of partnership where both parties are financially responsible.
What is a general partnership
Stockholders do not have financial obligations to corporations and are said to have
What is limited liability
Owners of this type of stock own a portion of the corporation, but also enjoy preferences in the distribution of assets and dividends.
What is Preferred Stock
Can a corporation or a limited liability company have only one shareholder/member?
What is - yes
Funding for this type of entity is limited to:
personal funds and personal loans
Type of partnership where one partner is only partially responsible for the financial aspect of the business
What is a limited partnership
Major advantage of corporations is that they have the ease of raising
What is financial capital
This is the newest form of business entity created by statute.
What are Limited Liability Companies (LLC)?
As to each type of business below - what do we call the owners of each?
Sole Proprietorship
Partnership
Corporation
Limited Liability Company
What is
Sole proprietor
Partner - General/Limited
Shareholder
Member
True/False - When you operate a business as a sole proprietorship, the business is considered a separate legal entity from the owner.
False - in a sole proprietorship, the owner IS the business. That is why there is unlimited liability.
Identify the rights of the partners:
Right to share in management
Right to share in profits
Right to compensation - not really
Right to property - (Management, specific partnership owned property, partnership interest)
Right to inspect books
Right to an accounting
Shareholders will become liable for the debts/obligations of the corporation when a court pierces the corporate veil. What factors will a court look at to determine whether to pierce the corporate veil?
Lack of adequate capital when initially formed.
Not following of statutory mandates regarding the corporate business.
Commingling of shareholders personal interests with that of the corporation
Shareholder committing fraud through a corporation.
Part 1: This group is elected by the shareholders of the corporation and are responsible for the big picture/policy decisions of a corporation.
Part 2: This group is hired by the group in Part 1 and is responsible for the day-to-day operations of the corporation.
Part 1: What are the board of directors
Part 2: What are the officers
What is the business judgment rule?
What is a rule that says directors and officers are not liable for decisions that harm the corporation if they were acting in good faith at the time.