Intro To Business Test 2 Flashcards
What is a sole proprietorship?
Owned and managed by 1 company for profit
How do liabilities work in a sole proprietorship and partnership, on oppose to corporations and llc’s?
SP and Partners are completely liable for debt. Corporations and LLCs are not
What are the pros and cons for a sole proprietorship?
Pros: ease of formation, retention of control, pride of ownership, retention of profits, possible tax advantages
Cons: limited resources, unlimited liability, lack of permanence, heavy work load, hard to keep and attract good employees
What are the pros and cons for a partnership?
Pros: ability to pool financial resources, share responsibilities, play off different strengths, ease of formation, tax advantages
Cons: unlimited liability, potential for disagreeing, lack of continuity, difficulty in withdrawing,
What are the pros and cons for an S Corp?
Pro: won’t be double taxed, limited liability.
Con: no more than 100 stock holders, holders must be US citizens
What are the pros and cons for a C Corp?
Pros: limited liability, permanent, ease of transfer of ownership, ability to raise large amounts of financial capital, ability to make use of specialized management
Cons: hard-expensive to form, hard to operate more than one state, dbl taxes, more paper work and regulation, possible conflict of interest.
What are the pros and cons for a Closed Corp? (Statutory Close)
Pros: owners can participate in mngmnt with LL, doesn’t need board of directors, simpler rules
Cons: limited stock holders, not all states allow it, can’t sell shares to public with out offering to owners
What are the pros and cons for a non profit?
Pros: exempt from income taxes on all levels, LL, contributions made are tax deductible,
Cons: no stockholders, can’t contribute to political campaigns, can’t distribute dividends to its members, must keep accurate records to stay tax free
What are the pros and cons for an LLC?
Pros: LL, simplicity and flexibility of operation, tax pass through, flexible ownership,
Cons: hard to form, annual franchise tax, foreign status in other states, only certain types of firms can form, laws are different in every state.
What do you have to do to form a Corporation of any kind?
Must file articles of formation and pay a filing fee
How is a corporation treated legally?
Like another person
What is a C cooperation?
Common type of business, gives everyone LL
What is an S Corporation?
A form of Corporation that is taxed like a partnership
What is an Statutory Closed Corp?
A corp with a limited number of owners, simpler rules than C Corp
What is a non profit?
A business that doesn’t need to earn profit
What is an LLC?
A formof ownership that offers both LL to owners and ability to mng as well
What is a limited partnership?
One partner manages has complete liabilities, one doesn’t, has LL
What state is an attraction to businesses as it relates to forming corporations?
Delaware
What is a share holder? (Stock holder)
They are the owners of cooperation
What is a board? Board of directors
Individuals elected by stockholders to represent their needs
What is merger?
2 corporations agree to combine to start a new organization
What is an acquisition?
1 firm buys another
Under stand the format of franchising, how does it work?
A licensing agreement under which a franchisor allows franchisees to use its name, trade marked products, business methods, and other property in exchange for monetary payments and other considerations
What is an entrepreneur?
People who risk time and money to start and manage a business
