Corporations vs. Other Business Entities Flashcards
Corporation
a legal entity distinct from its owners and which may be created only by filing certain documents with the state.
Who are the owners of a corporation?
the shareholders
Are shareholders personally liable for obligations of the corporation?
no
Are officers or directors personally liable for the obligations of the corporation?
no
Who is liable for the obligations of the corporation?
only the corporation
Who has the right to management of the corporation?
the board of directors
The day-to-day operations of a corporation are overseen by whom?
the corporate officers
Is ownership of a corporation freely transferable?
yes
How long can a corporation last?
perpetually
C Corporation
a corporation in which both the income of the corporation and distributions made to shareholders are taxed separately. C corporations are subject to double taxation.
S Corporation
a corporation which is taxed as a partnership; i.e. only income of the corporation is taxed. Distributions to the shareholders are not taxed; they “flow through.”
Sole Proprietorship
a business entity where one person owns all the business assets.
Is a sole proprietorship separate from the owner?
no, they are the same entity.
Is the owner of a sole proprietorship personally liable for its obligations?
yes
How long can a sole proprietorship last?
only for the life of the owner
Is ownership of a sole proprietorship freely transferable?
yes
Benefit Corporation
a corporation which intends to benefit the public and the environment, in addition to its shareholders.
Benefit corporations are treated as what for tax purposes?
C corporations
In order to be designated a benefit corporation, what must happen?
the articles of incorporation must expressly state that it is a benefit corporation.
