Module 10- Forms of Business Organization Flashcards

1
Q

What three different types of owning a business?

A
  1. Sole proprietorship
  2. Partnership or limited partnership
  3. Corporation
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

This business has the least requirements for set up and costs(might just need business license), it has one owner, all its earnings are taxed as that owners income. What business type is this?

A

Sole Proprietorship

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Whats a con to Sole Proprietorship?

A

-There is no legal distinction between the business and its owner ( Bob Smith owning Bob Smiths Plumbing)
-The other has unlimited personal liability for all debts and obligations of the business.
For example if bob smiths plumbing gets sued, business assests and personal assets can be taken to cover damages

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What type of business involves 2 or more people operate a business for the purpose of making a profit?

A

A Partnership

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

How can partnerships be created?

A

A written or oral agreement OR an operation of law.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Creation of partnership by operation of law

A

If each partner: contributes capital($), shares net income, and participate in management….they are acting like partners and the law can imply that they are partners.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

PROS of partnership

A

jdfskl

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

CONS of partnership

A

PArtners have joint and several liability.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Joint and several liability

A

All partners are fully responsible for all debts of the partnership, as well as they are each responsible for their “share” of the partnerships debts.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Who is most at risk in a partnership business?

A

The partner with the most assests. The banks are allowed to go after the ‘richest’ partners becasue of partnership law.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Limited Partnership

A

is a variotion on partnership. It allows someone to invest in a partnership without having the potential liability without being considered a regular partner

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

2 types of partners in limited partnership

A

general and limited. The general partner has unlimited liability. the limited partner is only liable for their original contribution.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Limited partners

A

they cannot take part in management of the partnership. if they do, they become a regular partner and are more liable.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

The Corporation

A

The corporation is a distinct legal entity. CORP= “person”
You would get to schoose you =r own name, but you must have INC, CORP, or INC.
Chloe Carmichaels Cooking Corp.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is a dividence

A

A share in profits

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is taken away if a corporation is sued?

A

The corporations assets, the individual shareholders are not responsible

17
Q

Limited Liability

A

Banks having no access to your personal assets