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45 Cards in this Set
- Front
- Back
Sole proprietorship |
An unincorporated business owned by one person. |
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If an individual runs a business without taking any formal steps to create an organization, they are automatically... |
..A Sole Proprietorship. |
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A sole proprietorship is a ______ Tax entity. |
Flow through;means that owner must pay personal income tax on the profits. Business itself does not pay income tax. |
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What is a D/B/A? |
Some states require sole proprietorships to register their business name if it is different from their own. DBA=Doing business as, certificate. |
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Is the sole proprietorship responsible for all business debts? |
yes, the owner is personally liable. |
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Sole proprietorship work best for small businesses without large capital needs because... |
...Of limited options for financing the business. |
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Limited liability in a corporation |
A corporation protects managers and investors from personal liability for the debts of the corporation and the actions of others, but not against liability from their own negligence. |
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Transferability of interest in a corporation |
Corporations provide flexibility for enterprise. Corporate stock can be bought and sold easily. |
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Corporations have a ________ existence. |
Perpetual, they may continue even after the founders die. |
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Corporations are _____ entities. |
Taxable; must pay income tax on their profits. |
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Shareholders of a corporation must pay tax on _________. |
Dividends from the corporation. This means all profits are taxed twice, once from corporate, another from the shareholder. |
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The corporation pays tax at a top rate of __%. |
35%, this is a federal tax rate;most states also levy a corporate tax. |
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The shareholders are then taxed at the dividend rate of __%. |
15%. |
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Partnerships are taxed at an individual rate of __%. |
35% |
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True or false, on the Federal level a company may be considered a S corporation, but in State law it may be considered a regular corporation. |
True |
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S Corporation |
Smaller corporation |
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Shareholders of S Corps (S Corporation) have both the _______ and the _______. |
Limited Liability of a corporation, and the tax status of a partnership. |
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C Corporation |
Regular Corporation |
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How many classes of stock may an S corporation have? |
One, only one class of stock. |
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In a S corporation, the maximum number of shareholders is... |
100, there can be no more than 100 shareholders in a S corporation. |
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To qualify as a shareholder in a S Corporation, one must... |
Be a citizen of these UNITED STATES OF AMERICA. |
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To be considered an S corporation... |
...All shareholders must agree that the company should be an S corporation. |
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Close Corporation |
A company whose stock is not publicly traded. AKA Closely held/privately held corporation. |
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A close Corporation offers protection of minority shareholders. This means... |
...that a minority shareholder wont be mistreated by the majority due to the inability to just sell their stock. Therefore, minority shareholders are protected. |
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Transfer restrictions in a Closed Corporation mean... |
...That a statute typically permit the corporation to require that a shareholder first offer shares to the other owners before selling them to an outsider. |
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Flexibility in a closed corporation often means that... |
Close corporations can typically operate without a board of directors, a formal set of bylaws, or annual shareholder meetings. |
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Dispute resolution in Closed Corporations mean... |
That the shareholders are allowed to agree in advance that any one of them can dissolve the corporation. |
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If shareholders in a closed corporation come to a stalemate about dissolving the company... |
The problem is solved by dissolving the corporation. |
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In a close corporation, a share holder can ask a court to dissolve a close corporation if.... |
...the other owners behave opressively or unfairly. |
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Limited Liability Companies offer... |
The limited liability of a corporation and the tax status of a partnership. |
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In an LLC, Members are not personally.... |
Liable for the debts of the company. |
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Tax status of an LLC |
Like a partnership, income flows through the company to the individual members. |
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To organize an LLC, you must have.... |
...A charter and you should have an operating agreement. |
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LLCs can have members that are..... |
Corporations, partnerships, and nonresident aliens. |
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LLCs can't issue ______ __________. |
Stock Options |
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The members of the LLC must obtain the unanimous permission of the remaining members before.... |
transferring their ownership rights. |
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Does an LLC continue after members withdraw? |
Yes |
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If an LLC Goes Public... |
Then it loses its favorable tax status and is taxed as a corporation, not a partnership. |
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If a Corporations or LLC do not comply with the technicalities of the law, |
They may be held personally liable for the debts of the company. |
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Deritative lawsuit |
a lawsuit in the name of the corporation against the managers. |
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In short, many issues of law that are well established for corporations still remain ____ when it comes to LLCs. |
Foggy |
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B Corporation and LLC |
Benefit organization, aka B Corporation, is one that has pledged to have in a socially responsible manner. People, Planet, Profits. |
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Partnership |
An unincorporated association of two or more co-owners who operate a business for profit. |
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Each co owner is called a |
general partner. |
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In a partnership, each partner is |
personally liable for the debts of the enterprise. |