Term
| Legal forms of organization (4) |
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Definition
proprietorship,
partnership,
corporation,
limited liability company (LLC) |
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Term
| Most common form of ownership in US = |
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Definition
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Term
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Definition
| business owned/controlled by ONE person |
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Term
| Financial advantages of sole proprietorship (3) |
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Definition
all profits >> owner,
just regular income tax,
higher credit ratings |
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Term
| Advantages of sole proprietorship (4) |
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Definition
financial,
secrecy,
lack of restriction,
personal satisfaction |
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Term
| Disadvantages of sole proprietorship (3) |
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Definition
unlimited liability (responsible for all debts; business & personal),
limited size,
limited life |
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Term
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Definition
| association of 2+ persons as co-owners |
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Term
| Types of partnerships (7) |
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Definition
General,
Limited,
Limited liability,
silent,
secret,
dormant,
nominal |
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Term
| General Partner: liability, activity |
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Definition
unlimited liability
very active |
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Term
| Limited Partner: liability, activity |
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Definition
limited to investment
less active |
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Term
| Limited Liability Partner: liability, activity |
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Definition
| tax benefits of partnership while avoiding personal liability for malpractice of partners (doctors, lawyers, etc) |
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Term
| Silent Partner: liability, activity |
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Definition
known by general public,
not active |
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Term
| Secret Partner: liability, activity |
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Definition
not known by general public,
active in business |
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Term
| Dormant Partner: liability, activity |
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Definition
not known by general public,
not active |
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Term
| Nominal Partner: liability, activity |
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Definition
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Term
| Advantages of Partnerships (4) |
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Definition
incr sources of capital+credit,
improved decision-making,
improved chances of expansion/growth,
definite legal status |
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Term
| Disadvantages of Partnerships (4) |
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Definition
unlimited liability (general partners; COLLECTIVELY liable),
problems c continuity (partner's share must be sold upon death),
managerial problems,
size limitation (smaller than corp) |
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Term
| Requirements for corporations (3) |
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Definition
get permission from state,
≥3 incorporators (MI = 1 incorp),
corporate charter (type of business, # of shares) |
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Term
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Definition
"owners in the corporation &
have the right to elect members of the Board of Directors" |
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Term
| Responsibility of Board of Directors = |
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Definition
formulate long-range direction;
approving plans of top-management |
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Term
| Advantages of corporation (5) |
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Definition
limited liability (stockholders = limited partners),
indefinite life,
growth potential,
managerial efficiency (separate owners/managers),
transfer of ownership |
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Term
Disadvantages of corporation (4)
(TEST) |
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Definition
heavy taxation (**double-taxation**),
high organizational expense (charter fee, CPAs, etc),
government restrictions (regulated stock sales),
lack of secrecy |
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Term
| Two types of corporations (letters...) |
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Definition
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Term
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Definition
| tax code: allows income to be taxed as partnership income to stockholders (avoid double taxation!) |
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Term
| Eligibility requirements of S-Corp (2) |
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Definition
≤100 stockholders
≤25% income comes from passive investments (dividends, rent, capital gains) |
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Term
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Definition
limited liability of corp
+
tax advantage of partnership |
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Term
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Definition
| no limit on # of shareholders |
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Term
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Definition
| statutes differ from state to state |
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