Topic Three Finance Flashcards
Proprietorships
- business venture owned by an individual who is
personally liable for the venture’s liabilities
Unlimited Liability - personal obligation to pay a venture’s liabilities not
covered by the venture’s assets
Partnerships
- business venture owned by two or more individuals who are jointly and personally liable for the venture’s liabilities
Joint Liability - legal action treats all partners equally as a group
Joint and Several Liability - allows subsets of partners to be the object of legal action related to the partnership
Limited Partnership - limits limited partner liabilities in a partnership to the amount of
their equity capital contribution to the partnership
Corporations
-a legal entity that separates personal assets of the owners (shareholders) from the assets of the business
Limiited Liability
Coprate Charter - legal document that establishes the corporation\
S Corportation - provides limited liability for shareholders; plus,
corporate income is taxed like personal income to
the shareholders
Limited Liability Company
-a business organization owned by “members”
(shareholders) with limited liability
- * earnings can be taxed at the personal income tax
rates of the members
Number of owners and start up costs for each entity
Proprietership - one, low costs
partnership (general) - two or more, moderate costs
partnership (limited) - one or more, moderate costs
Corportaton - one or more no limit, high costs
S Corporation - less than 100 owners, high costs
LLC - one or more, no limit, high costs
Investor liabilitys for each entity
Propreitorships - unlimited liability
Partnership (general) - unlimited
Partnership (limited) - limited
Corporation - limited
S Corporation - Limited
LLC-limited
Equity Capital Sources
Proprietorshio
Partnership (General)
Partnership (Limited)
Corporation
S Corporation
Limited Liability Company
Entity Capital Sources for entities
Proprietorship - Owner
Partnership (General) - Partners, Families and friends
Partnership (Limited)- General and limited partners
Corporation - Venture investors and shareholders
S Corporation - venture investors and subchapter s investors
Limited Liability Company- venture investors and equity offerings to owners
firm life and liquidity of entites
Proprietorship - difficult to transfer owenership
Partnership (General) - life determined by partners, difficult to transfer ownership
Partnership (Limited) -same as general partnership
Corporation - unlimited life, easy to transfer ownership
S Corporation - unlimited life, difficult to transfer ownership
Limited Liability Company - life set y owners - difficult to transfer ownership
tax for entites
Proprietorship - personal tax rate
Partnership (General) - personal tax rate
Partnership (Limited) - personal tax rates
Corporation - corpoartion taxation
S Corporation - income flows to shareholders, taxed at personal tax rate
Limited Liability Company - income flows to owners, taxed at personal tax rate
Intellectual Property (IP):
a venture’s intangible assets and human capital, including inventions that can be protected from being freely used or copied by others
Protecting Valuable Intangible
Assets
- Patents
- Trade Secrets
- Trademarks
- Copyrights
Patents:
intellectual property rights granted for
inventions that are useful, novel, and nonobvious
Trade Secrets:
intellectual property rights in the form of
inventions and information, not generally known to others, that convey economic advantages to
the holders
Trademarks:
intellectual property rights that allow firms to
differentiate their products & services through
the use of unique marks
intellectual property rights that allow firms to
differentiate their products & services through
the use of unique marks
intellectual property rights to writings in
printed and electronically stored forms
Four Kinds of Patents
Utility - protect mechanics or inventions
Design - cover the apperance of items
Plant - protect the discovery of new plant varieties
Business Method - protect specific ways of doing business
