Chapter 4 - Forms of Business Flashcards
General Partnership
No formalities, all partners have a say in day-to-day management, all partners are liable for all debts of the company
Sole proprietorship
One person owns a business
Limited partnership
At least one GP who is on the hook for all, limited liability for all debts; only up to the amount of investment in the business, limited in their management “silent partners”
Limited liability company (LLC)
All members have limited liability, some control, taxed like a partnership
Corporation
“Creature of state” with rights as an “artificial person”; buy property make contracts sue and be sued. Separate entity from owners.
How do shareholders make money?
Give dividends or resell the stock for more than they paid
Dividends
Distribution of earnings to stockholders
Common stock
Vote on corporate matter but financially come last
Preferred stock
Have no vote but dividends are paid before common stock owners
Proxy
A legal form listing issues to be decided at a stockholders meeting
Domestic corporation
Doing business in the state it is Inc.
Foreign corporation
All other states it does business
Alien Corporation
Business from another country that does business in the US
Board of Directors
Top governing body of a corporation voted by stockholders
Corporate officers
President vice president chairman voted by the Board of Directors
