Sole, Partners, and LLC Flashcards
Paralegals are bound to the rules of ethics just as attorneys; Paralegals shouldn’t advise clients on ______ of a particular ________ ________.
paralegals shouldn’t advise clients on tax consequences of a particular business organization
taxes are paid based on the ________ _________.
allocated amount (“pass through taxation”)
Partnerships can purchase insurance to cover _________ ______.
personal liability
Sole proprietor’s business is an _______ _____ of him/herself. **enhance this explanation
alter ego;
**in this situation the owner and the business are indistinguishable
the minim number of people required for a
- sole proprietorship
- general partnership
- limited partnership
- limited liability partnership
- limited liability company
- sole: one (only)
- general P: two or more
- LP: must have at least one general partner and one limited partner
- LLP: two or more
- LLC: must have the company and its members
Duties owed by an AGENT (4)
- performance
- notification
- loyalty
- accounting of profits
Duties owed by Principal (3)
- compensation
- reimbursement and indemnification
- cooperation
Formation of agency occurs through _____, _____, or _____.
- express agreement
- implied agreement
- estoppel
Agents can have 1._______ authority or 2._____ authority to act for their principle. **enhance on each authority
- actual authority (which is express or implied)
2. apparent authority (where a reasonable third party would understand that an agent had authority to act)
UPA (uniform Partnership Act) and RUPA (revised uniform partnership act) in relations to dissolution; which one does AR have?
- under the UPA, dissolution of the partnership triggers a winding up, namely, a wrapping up of the business affairs of a partnership
- RUPA provides that a partnership may buy out the interest of a partner who leaves the partnership, and the partnership will continue its business
- AR has RUPA
When is an EIN necessary for a sole proprietor
when one wants to:
- hire employees
- have a solo 401k
- file for bankruptcy
- form a partnership or LLC
different business organizations have to use certain things to identify themselves as the organization, what are they:
- LLCs must have the words “limited liability company” or letters “LLC” or “PLLC” in their name
Full shield and Partial shield, what are they and which one does AR have
- Full shield states: states in which partners in an LLP are fully protected form personal liability, whether arising in tort or contract
- Partial shield states: states in which partners in an LLP retain liability for contractual obligations but have no personal liability for obligations arising in tort
- AR is a partial shield state
partnerships are 1.______ entities for some purposes, but are 2._________ of its partner for other purposes.
- separate entities
2. aggregates (combinations)
generally actions done in the ORDINARY COURSE of business do not require anything more than a 1._____ vote; if there are actions to amend articles or dissolve a Business Organization, the requirement, unless specified, must be 2._______.
- majority
2. unanimous
In AR, generally everything required to be filed is filed with the 1. ________, with the exception of the assumed name certificate which is filed with the 2. ________.
- Secretary of State
2. County’s Clerk
limited partnerships have allocations based on 1. _______.
Whereas in general partnerships, it is 2. _______.
*** however, both are allowed to do what?
- the amount invested (allocations is determined on the basis of the value of the contributions made that have not been returned)
- equal allocations (regardless of investment)
* ** Both can make agreements to modify this statutory standard.
LLPs are generally governed by and found within the partnership statutes ***enhance this statement
4-46-1001, a partnership can agree to become a LLP if it is approved pursuant to the partnership agreement;
after the approval required by subsection (b), a partnership may become a LLP by filing a statement of qualifications
A partnership agreement does not have to be in writing, however if a partnership chooses to become a LLP, that election has to be made and filed with ________.
the Secretary of State
LLC is a separate entity, it is, however, taxed like a partnership, which means it is treated as a _______ or _______.
pass through or aggregate organization
A sole proprietor is an _______ for all purposes.
aggregate
when a claimant pierces the LLC’s veil, that person is essentially arguing that:
the LLC is not operating pursuant to statutory provisions and it allows the claimant to execute against the LLC members personal assets
personal guaranty
the signing of a personal guaranty results in a partner’s or member’s personal liability for a debt or obligation for whatever that particular personal guaranty covers
** a partner can become liable for a limited partnerships debts if he executes a personal guaranty
When is a principal liable for the torts of his agents? (3)
- principals are liable for an agent’s torts and acts committed in the COURSE AND SCOPE of the agency
- a principal cannot ratify a portion of an unauthorized transaction, and not ratify the whole of it
- one who recognizes another as his agent cannot excape liability for the agent’s acts unless he notifies the 3rd person of the termination of the relationship
