Term
| 3 major forms of business ownership |
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Definition
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1.A SOLE PROPRIETORSHIP is a business that is owned, and usually managed, by one person; it is the most common form.
2. A PARTNERSHIP is a legal form of business with two or more owners.
3. A CORPORATION is a legal entity with authority to act and have liability separate from its owners. |
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Term
| Percents of the 3 types of businesses |
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Definition
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1. A SOLE PROPRIETORSHIP - 72%
2. A PARTNERSHIP - 8%
3. A CORPORATION - 20% |
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Term
| Advantages of Sole Proprietorships |
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Definition
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1. Ease of starting and ending the business.
2. Being your own boss.
3. Pride of ownership.
4. Leaving a legacy behind for future generations
5. Retention of company profits
6.No special taxes |
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Term
| Disadvantage of Sole Proprietorships |
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Definition
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1. UNLIMITED LIABILITY
2. Limited financial resources
3. Management difficulties.
4. Overwhelming time commitment.
5. Few fringe benefits.
6. Limited growth
7. Limited life span
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Term
| Define: Unlimited Liability |
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Definition
| that is, any debts or damages incurred by the business are your personal debts and you must pay them, |
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Term
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Definition
General Partners - An owner (partner) who has unlimited liability and is active in managing the firm.
Limited Partner - An owner who invests money in the business but does not have any management responsibility or liability for losses beyond the investment. |
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Term
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Definition
| The responsibility of a business's owners for losses only up to the amount they invest; limited partners and shareholders (stockholders) have limited liability. |
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Term
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Definition
GENERAL PARTNERSHIP - a partnership in which all owners share in operating the business and in assuming liability for the business debts
A LIMITED PARTNERSHIP - a partnership with one or more general partners and one or more limited partners.
MASTER LIMITED PARTNERSHIP (MLP) - a partnership that looks much like a corporation (in that it acts like a corporation and is traded on a stock exchange) but is taxed like a partnership and thus avoids the corporate income tax
LIMITED LIABILITY PARTNERSHIP (LLP)- a partnership that limits partners' risk of losing their personal assets to only their own acts and omissions and the acts and omissions of the people under their supervision.
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Term
| Advantages of Partnership |
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Definition
1. More Financial Resources
2. Shared managment and pooled skills/knowledge
3. Longer Survival
4. No special Taxes - file as personal income |
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Term
| Disadvantages of Partnerships |
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Definition
1. Unlimited Liability
2. Division of Profits
3. Disagreements among partners
4. Difficulty of termination |
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Term
| Advantages of Corporations |
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Definition
1. Limited Liability
2. Ability to raise more money for investment
3.Size
4. Perpetual Life
5. Ease of Ownership Change
6. Ease of attracting talented employees
7. Separate ownership and managment |
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Term
| Disadvantages of Corporations |
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Definition
1. Initial Cost
2. Extensive Paperwork
3. Double Taxation
4. Two Tax returns
5. Size
6. Difficulty of ending
7. Conflict between stockholders and directors |
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Term
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Definition
defines the THREE KEY ELEMENTS of any general partnership:
i. Common ownership.
ii. Shared profits and losses.
iii. The right to participate in managing the operations of the business. |
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Term
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Definition
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A CONVENTIONAL (C) CORPORATION is a state-chartered legal entity with authority to act and have
An S CORPORATION is a unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships. |
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Term
| Define: Alien Corporation |
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Definition
does business in the United States but is chartered
(incorporated) in another country. |
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Term
| Define: Domestic Corporation |
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Definition
does business in the state in which it's chartered
(incorporated). |
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Term
| Define: Foreign Corporation |
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Definition
| does business in one state but is chartered in another. A foreign corporation must register in states where it operates. |
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Term
| Define: Closed (private) Corporation |
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Definition
is one whose stock is held by a few people and isn't
available to the general public. |
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Term
| Define: open (public) corporation |
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Definition
| se lls stock to the general public. |
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Term
| Define: quasi-public corporation |
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Definition
is a corporation chartered by the government as an
approved monopoly to perform services to the general public. |
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Term
| Define: professional corporation |
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Definition
| is one whose owners offer professional services (doctors, lawyers, etc.). Shares in professional corporations aren't publicly traded. |
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Term
| Define: nonprofit (or not-for-profit) corporation |
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Definition
| one that doesn't seek personal profit for Its owners. |
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Term
| Define: multinational corporation |
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Definition
| a firm that operates in several countries. |
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Term
| To be an S corporation they must: |
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Definition
1. Have no more than 100 shareholders. (All members of a family count as one shareholder.)
2. Have shareholders that are individuals or estates, and who (as individuals) are citizens or permanent residents of the United States.
3. Have only one class of stock.
4. Derive no more than 25 percent of income from passive sources (rents, royalties, interest). |
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Term
| An S corporation that loses its S status may not operate under it again for at least ____ years |
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Definition
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Term
| Do S companies get double taxed? |
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Definition
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Term
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Definition
Corporate income is taxed twice.
1 the corporation pays tax on its income before it pays dividends to stockholders
2 stockholders pay income tax on the dividends they receive. |
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Term
| Define: limited liability company (LLC) |
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Definition
| A company similar to an S corporation but without the special eligibility requirements. |
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Term
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Definition
1. Limited Liability - no personal loss
2. Choice of taxation - as partnerships or corps.
3. Flexible ownership rules
4. Flexible distribution of profit and losses
5. Operating flexibility - no articles of organization
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Term
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Definition
1. No Stock
2. Limited Lifespan - must dissolve after 30 years
3. Fewer Incentives - can't give stock options
4. Taxes - must pay self-employment taxes
5. Paperwork |
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Term
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Definition
| result of two firms joining to form one company. |
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Term
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Definition
is one company's purchase of
the property and obligations of another company. |
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Term
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Definition
| The joining of two companies involved in different stages (or procresses of prodution) of related businesses. |
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Term
| Define: Horizontal Merger |
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Definition
| joins two firms in the same industry and allows them to diversify or expand their products |
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Term
| Define: Conglomerate Merger |
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Definition
| unites firms in completely unrelated industries in order to diversify business operations and investments |
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Term
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Definition
| An attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing |
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Term
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Definition
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1. MANAGEMENT AND MARKETING ASSISTANCE.
2. PERSONAL OWNERSHIP
3. NATIONALLY RECOGNIZED NAME
4. FINANCIAL ADVICE AND ASSISTANCE: assistance in arranging financing and learning to keep records and financing to potential franchisees.
5. LOWER FAILURE RATE. |
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Term
| Disadvantages of Franchises |
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Definition
1. LARGE START‑UP COSTS: fee to obtain the rights
2. SHARED PROFIT: The franchisor often demands a large share of the profits, or royalty, based on sales not profit.
3. MANAGEMENT REGULATION
4. COATTAIL EFFECT
5. RESTRICTIONS ON SELLING
6. FRAUDULENT FRANCHISORS.
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Term
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The main factor restricting women’s ownership of franchises |
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Definition
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Term
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Definition
: The actions of other franchisees have an impact on the other franchisees
competition from fellow franchisees. |
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Term
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Definition
| A business owned and controlled by the people who use it-producers,consumers, or workers with similar needs who pool their resources for mutual gain |
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