Module 11 (1) Flashcards
What is corporate law?
An area of law that facilitates business activity
How does corporate law facilitate business activity
By providing people with different legal forms that they can use to operate the business
What is Sole proprietor
Where the individual IS the business. They are personably liable for the businesses depts and liabilities
if a sole proprietor is using a business name other than their own, what will they need to do?
File paperwork so people can identify the person behind the business, (called a trade name)
what is a “partnership business”
When two or more people work together to make profit
Any profits losses in a partnership is treated as __________ ________ of the partners
Personal income
What is a Corporation business?
A seperate legal entity who runs the business, if you need money the corporation can borrow it or solicit investment from shareholders
What is a big incentive for partners to keep an eye on each other?
They are both personally liable for the partnership debts and liabilities
What can sahreholders do?
They can buy ownership shares even though their not involved in the business
The corporations profits and losses are taxted ________ from the income of the people involved in the corporation
Seperately
Are people involved in a corporation usually liable for a corporations debts and liabilities?
No because theres “limited liability” in corporation businesses
What is Limited Liability?
The corporations creditors can go after the business’ property but not the personal property of people who own or run the business
Why is it harder to set up a corporation compared to a sole or partnership business
Because you have to go through an incorporation process
The risks are better in a corproation becasue the business is reliable and not you, but what other ways can you protect yourself from these risks?
Insurance
Putting a term in a contract that limits the lender from going after his business assets (not his personal)
