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49 Cards in this Set

  • Front
  • Back
what do you need to register for sole proprietorship?
nothing, although you may need an assumed name certificate
advantages of SP?
personal control
financial control
disadvantages of SP?
lack of contribution of labor
complete personal liability
definition of partnership?
2 or more individuals entering into business for profit
what needs to be filed for partnership?
no papers need to be filed
an assumed name contract probably should be filed
advantages of partnership
possible contribution of labor
possible contribution of expertise
disadvantages of partnership
absent any written agreement(AAWA) each general partner is liable for all partnership debts and obligations, acts oc other partners in partnership matters
- AAWA partnership interests cannot be sold
written partnership agreement
a - addition of new partners
b - termination of partners
c - contingency for situations where a partner dies or is incapacitated
d - methods of billing
e - methods of accounting
f - money management
g - purchases
h - sales of partnership property
i - managerial authority
partnership managerial authority
1 - authority for personnel
2 - who can hire
3 - who can terminate
4 - who can enter into contracts
5 - who executes contracts
6 - a host of other conditions
silent partner
one who elects not to manage
secret partner
one who is unknown to the public
dormant partner
one who no longer participates in the business
limited partnership
limits the liability of the individual partners
general partner
there must be at least one general partner who is legally liable for the partnership matters
- there can be more than one general partner
paperwork for limited partnership
must be registered with the state
-registration must give the name of the GP and the names of all limited partners
advantages of Ltd
-liability of limited partners is limited to their initial contribution
-their personal assets cannot be used to satisfy partnership obligations
-the general partner is liable for all unsatisfied obligations
disadvantages of Ltd
-ltd partners cannot sell their interest without this being included in a written agreement
-ltd partners cannot participate in management
-ltd partners who manage become GPs even if they do not know it
limited liability companies(LLC)
-must be registered with the state
-registration must include the names of all participants
-the operating agreement must also be filed with the state
advantages of LLC
-members can have different share interests
-members can sell their interests at will
-members can participate in management
a legal person recognized by the state
rules of corporation
formed via contract with the state
-applicant files an application for a charter with the state - $60
corporate charter
copy of the application that is returned to the applicant, the charter is the document that gives life to the corporation
reasons for incorporating
a - management potential
b - finance
c - tax consequenses
d - risk
domestic corporations
formed within the state
foreign corporations
formed in another state
example: delaware, maryland, and new york have more lenient laws
corporate bylaws
rules which run the day-to-day operation
-belongs to shareholders, who can modify, vote, etc.
how can charter be amended?
by unanimous vote
ultra vires act
judge can dissolve a corporation that is doing something not permitted in charter/bylaws
example: corporation can't make charitable contributions unless specified
rules to keep corporation going
1 - at least one meeting per year with all shareholders
2 - send notice of meeting in time for shareholders to attend(must be convenient)
3 - must keep minutes of meeting - no special form necessary. if point of law is included, you're liable
4 - separate corporate bank account - no co-mingling of funds
5 - in michigan, you may need to file operating statement with treasury dept.
's' corp
corp has to file corp income tax
person files personal income tax
ask IRS to recognize as an "s" corp allows you to avoid filing twice
charitable groups - irs must approve first
"close" corporations
25 members or less, it doesn't trade stock
corporate veil
created when incorporated - separates personal assets from corporate assets
common stock
appreciates in value
gets dividend
preffered stock
no vote
no appreciation(callable)
gets dividend
what happens if there aren't enough funds to pay dividends for preferred stock?
dividends accumulate and are paid when the funds are available
convertible stock
if preferred stock doesen't get div. for x amount of time, you can trade to common stock(or shareholders can elevt a director
securities act of 1933
rules on initial offering of stock
2nd securities act(1934)
protects people buying 'used' stock
rule 10-b5 - insider trading(determined by the SEC)
margin requirement(1934)
set by the SEC - you can't buy stock on credit
margin call
broker calling in the debt owed for stocks
aren't illegal, but planning one is
the sherman act(1890)
first antitrust law - broke up standard oil
-prohibits restraint of trade
-prohibits monopolizing
clayton act(1914)
prohibits mergers that tend to create monolopy
prohibits price discrimination
prohibits interlocking directorates
interlocking directorates
director of 2 or more corporations at the same time
clayton act section 6
labor of a human being is not a commodity or article, for purposes of antitrust laws
(allows unions)
FTC trade act
prohibits unfair competition(deceptive acts or practices)
robinson-patman act
prohibits predatory practices
(selling at a loss to gain market or undercut opponents)
what needs to be filed for:
1 - sole proprietorship
2 - partnership
3 - limited partnership
4 - limited liability company
5 - corporation
1 - nothing, assumed name cert. should be, license may be required for some occupations
2 - nothing, assumed name cert. should be
3 - registered with state, giving name of GP and names of all Ltd partners
4 - registered with state(names of participants), file operating agreement
5 - charter