Chapter Eighteen Flashcards
limited liability can fall under three types of entities
corporation
s corporation
limited liability company (LLC)
what does limited liability do for a business
for the three business entities: “sheilds” the owners of the corporation or LLC from personal liability for the debts or negligence of the business
Corporations have a lot of _____
_______requirements
charter
bylaws
meetings
how are corporations classified
regionally
domestic
foreign
alien
domestic corporation
does business within its state of incorporation
foreign corporation
formed in X state, doing business in Z state
alien
formed in another country
characterisitics about business entities that you need to know
limited liability
owners (including stocks)
taxation
profit/loss
foreign investors
who owns a corporation?
NOT who runs it
stockholders/shareholders
who runs a company
who is elected once a year?
who runs on a daily basis?
BOD are elected once a year
hire CEO to run corporation on a daily basis
are owners of corporation held liable for corp. debts/liabilities? Will they ever lose investments?
shareholders are not liable for the contracts or torts of the corporation because of limited liability
shareholders can always lose their investments due to stock prices
corporations taxation
taxed as a corporation
corp earn profit: dividends or retain for profit
corporations profits and losses
ONLY according to investment
all p/l are allocated to each shareholder’s proportionate shares of stock
if you own 50% of stock, you must receive 50% of losses, profits, credits, etc.
how a corporation is formed
TN Secretary of State
name search
File Articles of Incorporation
Pay fees
1st organizational meeting
types of search names under a corporation
reserve name
assume name
reserve name
can reserved name for 4months
assume name
5yrs - to drop the Inc, Corp
how much is it to start a coprporation
$100 in TN
what happens once a corporation is chartered
first organizational meeting
BOD meets how often in a corporation
once a year
bylaws for a corporation
internal rules of management
forming a corporation in more detail
what happens after chartered
search name (reserve or assumed)
file articles of incorporation
pay fees
once chartered
BOD (meet once a year)
bylaws
articles of incorporation
like a charter
corporate name
issue of shares authorized
registered agent
principal office
shares, classes of stock
statement that the corporation is for-profit
how must a company get the protection of limited liability
they must “act” like a corporation
must use “inc” or “corp” after their name and on every single document unless they have filed for an assumed name
assumed name
you are TN Pioneer Oil Co. Inc
but want to operate as:
Exxon
what are s corporations
small business/subchapter
no more than 100 shareholders - one type of stock
taxed as a partnership
NO foreign investors
profits divided like corporation
how does an S corp run like a corp
must follow the same formalities and record keeping procedures
who manages a company in S corp
directors or officers
piercing the corporate veil
the owners use a corporate entity to perpetrate a fraud, circumvent the law etc.
exposes shareholders to personal liability
REMOVING the protection of LL –> when there is fraud
