Chapter 11- Legal Issues and Managing Risk Flashcards
What are the three legal structures?
- Sloe proprietorship
- Partnership
- Corporation
Sole Proprietorship Characteristics
Definition: Business owned by one person.
- Unlimited liability; but right to profits
- Personally liable for lawsuits
Advantages of Sole Propietorship
- Ease of Start
- Simplicity of Registration
- Fewer Govt. regulation
Disadvantages
- Difficult fund raising
- Lack of Emotional support
- Great time and energy invested
Partnership
Definition: Two or more partners
Limited Partnership
Partnership with general partner: involved in operations, unlimited liability and limited partner: not involved, limited liability
Advantages
More Ideas
More capital and guidance
Disadvantages
Partners can lose because of the decision of other partners even without their knowledge or agreement
Disagreement, death can end partnership
Corporation
a legal entity composed of stockholders under a common name
Characteristics of Corporations
- Issue stock to shareholders (issues to owner; sells to investors)
- Business is a separate entity
- Continues regardless of death, disagreements
Advantages of Corporation
- Ability to sell shares
- Easy of transfer
- Limitation of personal liability
Disadvantages of a Corporation
- Double taxation
- Loss of founder control
- Higher formation costs
- More govt. regulation
What is a contract
An agreement between two or more parties that is enforceable by law
A successful Contract Should achieve these 4 things
- Avoid misunderstandings
- Ensure work
- Ensure payment
- Avoid Liability
Contingency
A condition that must be met for something else to occur
Letter of Agreement
A document that puts an oral understanding in writing, in the form of a business letter
Liquidation
Selling all assets to recover debt
Service Mark
a design that identifies and distinguishes the source of a service rather than a product
Copyright
Legal protection offered to authors of original works- literary, dramatic, musical and artistic works.
Elements of Copyright
- c symbol
- the word Copyright or copr.
- current year
- Name of owner, or recognizable alternative
Electronic Rights
the right to reproduce someone’s work online
Patent
An exclusive right, granted by the govt to produce use, and sell an invention or process
Public Domain
Property rights available to the public rather than held by an individual
Insurance
A system of payment provided by insurance companies to reimburse individuals when their property/wealth is damaged, destroyed, or lost
Basic Coverage for Small businesses
- Worker’s compensation insurance
- Property insurance
- Disability insurance
Three occurances that can wipe out data
- Power surge
- Computer viruses
- Disk failure
Issues to address in Disaster recovery plan
- Communications
- Base of operations
- Priority activities
- Return to facilities
Permit
An official document that gives a party the right to hold a specific event
License
An official document that grants the right to engage in an activity for a specified period of time
Certificate
An official document that verifies something
