Business Forms

Question 1

Characteristics of Sole Proprietership

Answer 1

1. Business owned by single person
2. Unlimited liability
3. No filing required
4. Profits to owner

Question 2

Characteristics of General Partnership

Answer 2

1. Association of 2 or more persons
2. Shared liability
3. No written agreement required
4. Profits to partners

Question 3

Characteristics of Limited Partnership

Answer 3

1. 2 or more partners, with at least 1 limited and 1 general partner
2. Limited partner is not liable
3. Need to file with secretary of state
4. Profits based on capital contributions

Question 4

Characteristics of Limited Liability Company

Answer 4

1. All partners limited
2. No liable partners
3. Need to file and include LLC in name
4. Profits passed through based on capital contributions

Question 5

Characteristics of Corporation

Answer 5

1. Entity with separate existence
2. No liability for owners (save veil piercing)
3. Need to file
4. Profits based on share ownership

Question 6

Double Jaws of Corporate Taxation

Answer 6

1. Corporation pays tax

2. Shareholders pay tax on corporate dividends

Question 7

Internal Affairs Doctrine

Answer 7

State of incorporation governs the internal affairs of corporation.
Exception: CA and NY

Question 8

Articles of Incorporation should contain

Answer 8

1. Name of Corporation
2. Agent for Service of Process
3. Purpose of Corporation
4. Share Provisions
5. Close Corporation Statement

Question 9

After Corporate Filing Tasks:

Answer 9

1. Draft by-laws
2. Corporate Supplies (minute book, seal, etc.)
3. Adopt the by-laws and elect directors
4. Hold meeting of directors
5. File statement of Domestic Corporation

Question 10

Ultra-Vires Doctrine

Answer 10

When a contract
1. is designed to achieve a purpose not in articles
2. employs a power not in statute or articles
Contract is not void, but Corp can sue directors for damages caused by U.V. act

Question 11

Promoter’s fraud consists of

Answer 11

A promoter engaging in conduct that violates fiduciary duty to prospective investors, creditors, co-promoters, and corporation

Question 12

Liability of Promoter for pre-incorporation contract

Answer 12

Promoter is liable unless other party agreed to waive liability

Question 13

Types of defective Incorporation

Answer 13

1. Substantial compliance - court ignores minor defect
2. Sufficient compliance - court finds corporation as to all parties but the state
3. Corporation by estoppel - court finds corporation as to 3rd party, but no corporation exists