Entrepreneuership/Entities

Question 1

Corporation

Answer 1

organization formed with state governmental approval to act as an artificial person to carry on business (or other activities), which can sue or be sued, and (unless it is non-profit) can issue shares of stock to raise funds with which to start a business or increase its capital

Question 2

Holding company

Answer 2

type of financial organization that owns a controlling interest in other companies, which are called subsidiaries; the parent corporation can control the subsidiary’s policies and oversee management decisions but doesn’t run day-to-day operations

Question 3

Shareholder

Answer 3

person who owns stock in a corporation

Question 4

Board of directors

Answer 4

group of people, selected by the shareholders, who make the major decisions for the company; the exact responsibilities of the board are governed by the company’s articles of incorporation

Question 5

Articles of incorporation

Answer 5

highest governing document in a corporation; also known as the corporate charter; generally include the purpose of the corporation, the type and number of shares, and the process of electing a board of directors

Question 6

Bylaws

Answer 6

regulations and rules established by a company or other organization for internal management

Question 7

LLC

Answer 7

Limited Liability Company; non-incorporated business organization that retains elements of both partnerships and corporations

Question 8

Member managed

Answer 8

all owners (members) also act as managers who can serve as agents of the business and bind the business contractually

Question 9

Articles of organization

Answer 9

public and official document used to create a limited liability company (LLC); LLC members must file the articles of organization before the relevant state authority (usually the Secretary of State) for approval

Question 10

Operating agreement

Answer 10

governing contract adopted by members of a Limited Liability Company (LLC); lays out the business’s course and helps operations and management become more organized

Question 11

Partnership

Answer 11

for-profit business organization comprised of two or more persons

Question 12

Sole proprietor

Answer 12

someone who owns an unincorporated business by himself or herself

Question 13

Group agreement

Answer 13

any agreement governing the acquisition, holding, voting or disposition of securities of a Person

Question 14

Leaving member

Answer 14

an individual member of the Group who ceases to record and/or perform as a member of the Group, and to engage in other professional activities of the Group

Question 15

Contracts

Answer 15

agreement between two parties that creates an obligation to perform (or not perform) a particular duty

Question 16

Consideration

Answer 16

promise, performance, or forbearance bargained by a promisor in exchange for their promise; the main element of a contract; without consideration by both parties, a contract cannot be enforceable

Question 17

Bargained-for-exchanged

Answer 17

consideration given by the promisor must induce the promisee to incur a legal detriment and/or provide a legal benefit to the promisor, either or both of which are sufficient to induce the promisor to make the promise

Question 18

Material

Answer 18

term in the agreement that is considered to be material to the contract or without which the parties would not have entered into it

Question 19

Independent contractor

Answer 19

payer has the right to control or direct only the result of the work and not what will be done and how it will be done

Question 20

Employee

Answer 20

a person in the service of another under any contract of hire, express or implied, oral or written, where the employer has the power or right to control and direct the employee in the material details of how the work is to be performed

Question 21

Work-for-hire

Answer 21

work whose ownership belongs to a third party rather than the creator

Question 22

Net income

Answer 22

gross earnings minus mandatory withholdings and deductions, such as state and federal income tax and social security contributions

Question 23

Gross revenue

Answer 23

revenue minus costs of goods sold; money generated by all of a company’s operations, before deductions for expenses

Question 24

Arbitration

Answer 24

alternative dispute resolution method where the parties in dispute agree to have their case heard by a qualified arbitrator out of court

Question 25

Jurisdiction

Answer 25

power of a court to adjudicate cases and issue orders; territory within which a court or government agency may properly exercise its power

Question 26

Venue

Answer 26

county where you file your action

Question 27

Choice of law

Answer 27

an issue in conflicts of law as to what law (as among laws of different states or multiple federal laws) should be applied in a case

Question 28

Judicial precedent

Answer 28

decided case that furnishes a basis for determining later cases involving similar facts or issues