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23 Cards in this Set
- Front
- Back
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Sole Propriertorship
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Oldest and simplest form of business organization
No formalities to form No special requirements to operate Business and Owner are the same thing |
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Partnership
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Two or more persons carrying on a business for profit
Can operate with no formalities Should have a written, detailed partnership agreement specifying: 1) relation of partners to each other, 2) responsibilites of partners -- management, 3) duration, and 4) split of profits/money |
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Corporation
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Majority of businesses
Separate legal entity Created in Corporate structure Parties in Corporate Structure: 1) shareholders (owners and elect board of directors), 2) board of directors (runs corporation and employs manager of selects officers), 3) managers/officers, 4) shareholders have limited liability |
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Limited Partnership
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Create by Statute
State law Formal requirements to create: a) File Certificate of Limited Partnership and b) Similar to the corporate form |
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General Partner
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unlimited liability
fiduciary duty to limited powers |
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Limited Partner
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has limited liability
can take NO part in management of LP (if does, becomes general partner--unlimited liability) normally paid before general partners in dissolution |
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S Corporations
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If corporation meets requirements:
a. then taxed like a partnership, no double taxation b. shareholders have limited liability Requirements: a. must be a domestic corporation b. cannot be affiliated with a group of corporations c. shareholders must be individuals d. no more than 100 shareholders e. only one class of shareholders f. shareholders must not be resident aliens |
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Closely Held Corporations
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Known as family, close, or privately held corporations
created under state statutory law Shares are held by a small number of people personally known to each other must follow corporate responsibilites a. required corporate meetings b. double taxation |
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Professional Corporations
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available to professionals (e.g. attorneys, doctors, dentists, accounants)
give limited liability to shareholders (except malpractice) advantage largely overshadowed by Limited Liability Companies |
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Limited Liability Limited Partnership (LLLP)
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tries to combine LLP and LP
General Partner has limited liability very limited in scope untested |
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Who can have a Professional Corporation
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attorneys
doctors dentists accountants |
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Double Taxation
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Separate legal entities are taxed separately
any income that is dispersed to the owners of the corporation, the shareholders, is also taxed |
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Limited Liability
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The owners of the corporation are limited until the extent their investment and only to the extent of the investment
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Certificate of Limited Partnership
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created by state statute and requires a filing of documents to create the limited partnership
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Articles of Organization
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LL is created by the filing of this document with the proper state official
Secretary of State in Texas |
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Organizer
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literally the people who organize the LLC and can be future members or pressionals hired to organize the LLC
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Operating Agreement
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also called a Company Agreement or Company Regulations
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member-managed
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LLC governed by members of the LLC
Members who more resemble investors who lack management skills, knowledge or time |
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manager-managed
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LLC can designate one or more persons who may or may not be members as officers to do whatever the managers direct them to do as long as it is within the parameters of the Operating Agreement and applicable state law
Managers are the agents for the LLC and the members no longer have the responsibility/right to govern the LLC can be members or non-members, even a corporation |
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Dissolution
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occurs at the end of the fixed period, if any, when the duration of the LLC expires, often 30 years
the occurence of specified events in the operation agreement or Articles of Incorporation Action of the members to dissolve the LLC When the LLC has no members Entry of a decree of judicial dissolutiion |
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Winding up
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the creditors of the LLC are to be paid first then the members
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Articles of Dissolution
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filed after the winding up process is over
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Certificate of Dissolution
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terminates the LLC
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