Exam 3 CHP 12 Flashcards
One owner begins business operations.
Sole Proprietorships
The owner is personally liable for debts.
Liability of sole proprietor
The general rule that an employer is responsible for the negligent acts or omissions of its employees.
Respondeat superior doctrine
The person who accepts and files a corporation application.
Texas Secretary of State
Sometimes called a certification of formation or a charter, are a set of documents filed with a government body to legally document a formation of a corporation.
Articles of incorporation
Grant special privilege, give a business the privilege of having the only type of business in town.
Charter
Rules that regulate and govern the key structure of the corporation.
Bylaws
The location that the headquarters of a business is located.
Principal place of business
Has a perpetual life span.
Duration of corporation
The type of taxation corporations has to endure. Profits are taxed twice.
Double taxation
A type of corporation that has no more than 100 shareholders. Offers fewer tax expenses.
S corporation election
Own the corporation. Invested a large amount of money to oversee the operation of a corporation.
Shareholders
The governing individuals that are part of a board. Elected by shareholders. Make decisions pertaining to the corporation.
Directors
A rule that makes directors and managers immune from liability when problems result from honest mistakes in judgment, so long as there is a reasonable basis.
Business judgment rule
Created under statute by agreement of members. Members are liable to the extent of paid-in capital.
Limited Liability Company (LLC)
The federal number that is given to employees.
FEIN
Individuals who form an LLC. Can be 1 or more individuals.
Members
What is the term of ownership for members in an LLC?
Membership interest
A partnership owes each other fiduciary duty. Loyalty.
Partnership relationship
Members who share control over the business’s operations and profits.
General partners
A business organization made up of two or more persons who have agreed to carry on a business for profit.
Limited partnership
Investors who may not participate in managing the business.
Limited partners
A contract to legally use a large corporation’s name and likeness for business. Usually consists of payment of an initial fee and royalty there after.
Franchise contract (fees, royalties %)
A rule that requires the franchisor to give prospective franchisees a detailed disclosure document before a franchisee commits to a purchase.
Franchise Rule of FTC and disclosures
