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61 Cards in this Set

  • Front
  • Back
5 factors for selecting a business form CLTCT
Control of the business, liability to the owners, tax consequences, capitalization, and transferability of ownership
More control =
more personal of a business
the owner in an unlimited liability has, while the corporate controlled has
max control, limited control
Whats an example of a limited liability owner?
stock holder
describe unlimited liability?
its personal debt, they can take the assets and house
whats capitalization
how easy is it to raise funds
Most businesses in the US are under this form, describe it
Sole proprietorship, a business owned by one owner
describe startup, control, liability, tax consequences, capitalization, and transferability in a sole proprietorship
easy- no govt reporting, absolute control, unlimited personal liability, total pass through on taxes, very limited captialization, and transferability is a major issue
This is a business for profit owned by 2 or more people as co-owners
partnership
describe startup, control, liability, tax, and transferability in a partnership?
no filing and more capital make it easy to start, both partners have equal power, unlimited liability, tax passes through, transferability- all you can sell is your right to profits and business control goes to other partners
In a partnership, if one partner signs a contract then
the other partners, whether they are aware of it or not, are legally bound to the contract as well. Each partner has 100% control
Describe liability for parnterships
both partners are liable, the creditor can collect from both equally or only one, if the collection is unfair, its common to see sueing involved
Tax for a partnership
passes through, each partner is taxed on their personal income sheet
how does transferability take place in a partnership?
You can only sell your rights to profits, the control of the company goes to the other partners
Describe a limited partnership?
you must file with the state for this business, partnership where some partners only have limited liability
2 kinds of partners and the difference in a limited partnership
limited- no power or control, they are only liable for their investment in the company, General- has control and runs the day to day, have unlimited liability
describe capitalization, taxation, and transferability of a limited partnership
capitalization is greatly increased, all profits pass through to the owners personal income statement, and transferability of ownership can be a problem, but the limited partnership usually has a contract with details
What is a limited liability limited partnership?
the same as a limited partnership, except the general also has limited liability
whats a limited liability partnership?
the old doctor, lawyer, architects used this. Each partner is only liable for what they have invested, if one of the partners blows it, the others don't lose
Which business type is the most profitable? its an artificial entity that is legally seperate
corporations
corporations need to be permitted by the state government?
true
who are the owners in corporations? whats this mean?
stock holders, they aren't personally liable for debts
Describe control, capitalization, tax, and transferability in corps
you loss control when you sell ownership, massive pool of capitalization, stocks are extremely transferable, and double taxations
describe the corporate veil?
the owners are essentially away from the company "under a veil"
What are close and "S" Corps?
corporations where stock is not publicly traded, family corps
what was the reason for s corps?
encouraged corporate startup and limited liability. also the corp pays no tax, its straight pass through
Transferability and tax in a close corp?
very hard to transfer and same tax as regular corps
4 characteristics of S corps?
can't have multiple stock classes like regular corps, must be a standalone corp, all stockholders must be US citizens, and no more than 100 stockholders (limits capital)
Is there any practical reason for S corps?
no
whats the best of all worlds for business
LLC
whats it require to start an LLC
75$ and 4 pages of paperwork
in a LLC stockholders and owners have
limited liability
describe tax and capitalization in LLC
tax is the same as a partnership, LLC allows you to capitalize but stocks are not traded publicly
Whats the modern form of business for lawyers and docs
professional corporations
Describe a professional corp?
total protection of personal liability and taxed like a corp except, profits are distributed to the owners which means only personal tax, no business tax
This is the first step in the process of terminating a partnership?
dissociation
this business form was created by federal law?
S Corp
the ggeneral partner is liable in this business form
limited partnership
this business form was created by state law?
close corp
This is when a partner leaves the partnership
dissolution
sole proprietorships must file a tax return
f
creditors of a partnership must first seek recovery from partners assets before going after the personal assets of a partner
t
ownership in a partnership is not transferable
t
In both a limited partnership and a LLLPthe partners are not personally liable for the debts of the partnership?
F
venture capitalists often require companies they own to become llc's before going public
F
This is the first step in the process of terminating a partnership?
dissociation
this business form was created by federal law?
S Corp
the ggeneral partner is liable in this business form
limited partnership
this business form was created by state law?
close corp
This is when a partner leaves the partnership
dissolution
sole proprietorships must file a tax return
f
creditors of a partnership must first seek recovery from partners assets before going after the personal assets of a partner
t
ownership in a partnership is not transferable
t
In both a limited partnership and a LLLPthe partners are not personally liable for the debts of the partnership?
F
venture capitalists often require companies they own to become llc's before going public
F
If a partner is offered an opportunity that is related to the partnership business, he must first seek permission of the other partners before accepting it
F
If a partner withdraws does it automatically dissolve a term partnership?
T
While working part time at a supercorp resturant, jenna spills a bucket of hot french fries on a customer, whose liable?
both jenna and the corp
A dissociation occurs when
a partner quits
All members of a group are liable, they can be sued as a group, or any one of them can be sued individually for the full amount owing
joint and several liability
Shareholders of S corps have both the _____ _____ off a corp and the tax status of a
limited liability, partnership