Class 17

Front 1

Entrepreneur

Back 1

one who initiates and assumes the financial risk of a new business enterprise and undertakes to provide or control its management

Front 2

Sole proprietorship

Back 2

the simplest for of business organization, in which the owner is the business; the owner reports business income on his or her personal income tax return and is legally responsible for all debts and obligations incurred by the business

Front 3

Partnership

Back 3

an agreement by two or more persons to carry on, as co-owners, a business for profit

Front 4

Pass-through entity

Back 4

a business entity that has no tax liability; the entity’s income is passed through to the owners, and the owners pay taxes on the income

Front 5

Information return

Back 5

a tax return submitted by a partnership that only reports the income and losses earned by the business; the partnership as an entity does not pay taxes on the income received by the partnership; a partner’s profit from the partnership (whether distributed or not) is taxed as individual income to the individual partner

Front 6

Articles of Partnership

Back 6

a written agreement that sets forth each partner’s rights and obligations with respect to the partnership

Front 7

Confession of Judgment

Back 7

the act or agreement of a debtor in permitting a judgment to be entered against him or her by a creditor, for an agreed sum, without the institution of legal proceedings

Front 8

Joint liability

Back 8

shared liability; in partnership law, partners share liability for partnership obligations and debts; thus, if a third party sues a partner on a partnership debt, the partner has the right to insist that the other partners be sued with him or her

Front 9

Joint and Several liability

Back 9

in partnership law, a plaintiff can file a lawsuit against all of the partners together (jointly) or one or more of the partners separately (severally or individually); all partners in a partnership can be held liable regardless of whether the partner participated in, knew about, or ratified the conduct that gave rise to the lawsuit

Front 10

Dissociation

Back 10

the severance of the relationship between a partner and a partnership when the partner ceases to be associated with the carrying on of the partnership’s business

Front 11

Buyout price

Back 11

the amount payable to a partner on his or her dissociation from a partnership, based on the amount distributable to that partner if the firm were wound up on that date, and offset by any damages for wrongful dissociation

Front 12

Dissolution

Back 12

the formal disbanding of a partnership or a corporation; it can take place by (1) acts of the partner or, in corporation, acts of the shareholders and board of directors (2) the subsequent illegality of the firm’s business (3) the expiration of a time period stated in a partnership agreement or a certificate of incorporation or (4) judicial decree

Front 13

Winding up

Back 13

the second of two stages in the termination of a partnership or corporation; once the firm is dissolved, it continues to exist legally until the process of winding up all business affairs (collecting and distributing the firm’s assets) is complete

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Limited Liability Partnership (LLP)

Back 14

a hybrid form of business organization that is used mainly by professionals who normally do business in a partnership; like a partnership it is a pass-through entity for tax purposes, but the personal liability of the partners is limited

Front 15

Family Limited Liability Partnership (FLLP)

Back 15

a type of limited liability partnership owned by family members or fiduciaries of family members

Front 16

Limited Partnership

Back 16

a partnership consisting of one or more general partners (who manage the business and are liable to the full extent of their personal assets for debts of the partnership) and one or more limited partners (who contribute only assets and are liable only up to the extent of their contributions)

Front 17

General Partner

Back 17

in a limited partnership, a partner who assumes responsibility for the management of the partnership and liability for all partnership debts

Front 18

Limited Partner

Back 18

in a limited partnership, a partner who contributes capital to the partnership but has no right to participate in the management and operation of the business; they assume no liability for the partnership debts beyond the capital contributed

Front 19

Certificate of Limited Partnership

Back 19

the basic document filed with a designated state official by which a limited partnership is formed

Front 20

Limited Liability Limited Partnership (LLLP)

Back 20

a type of limited liability partnership in which the liability of all the partners, including general partners, is limited to the amount of their investments

Front 21

Limited Liability Company (LLC)

Back 21

a hybrid form of business enterprise that offers the limited liability of the corporation but the tax advantages of a partnership

Front 22

Member

Back 22

a person who has an ownership interest in a limited liability company

Front 23

Articles of organization

Back 23

the document filed with a designated state official by which a limited liability company is formed

Front 24

Operating Agreement

Back 24

in a LLC, an agreement in which the members set forth the details of how the business will be managed and operated; state statutes typically give the members wide latitude in deciding for themselves the rules that will govern their organization

Front 25

Franchise

Back 25

any arrangement in which the owner of a trademark, trade name, or copyright licenses another to use the trademark, trade name, or copyright in the selling of goods or services

Front 26

Franchisee

Back 26

one receiving a license to use another’s (the franchisor’s) trademark, or trade name, or copyright in the sale of goods and services

Front 27

Franchisor

Back 27

on licensing another (the franchisee) to use the owner’s trademark, trade name, or copyright in the selling of goods or services