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Terms in this set (82)approximately how many businesses are started each year in the US? 400,000 The three major forms of business ownership: 1. Sole proprietorships sole proprietorship A business that is owned, and usually managed, by one person. Many people do not have what to run a business on their own? money, time, or desire partnership A legal form of business with two or more owners. corporation A legal entity with authority to act and have liability separate from its owners. Advantages of Sole Proprietorship 1. Ease of starting and ending the business. Disadvantages of Sole Proprietorship 1. Unlimited liability—the risk of personal losses. Types of Partnerships (1) general partnerships general partnership A partnership in which all owners share in operating the business and in assuming liability for the business's debts. limited partnership A partnership with one or more general partners and one or more limited partners. limited partner An owner who invests money in the business but does not have any management responsibility or liability for losses beyond the investment. limited liability The responsibility of a business's owners for losses only up to the amount they invest; limited partners and shareholders have limited liability. master limited partnership (MLP) A partnership that looks much like a corporation (in that it acts like a corporation and is traded on a stock exchange) but is taxed like a partnership and thus avoids the corporate income tax. limited liability partnership (LLP) A partnership that limits partners' risk of losing their personal assets to only their own acts and omissions and to the acts and omissions of people under their supervision. Advantages of Partnerships 1. More financial resources Disadvantages of Partnerships 1. Unlimited liability conventional (C) corporation A state-chartered legal entity with authority to act and have liability separate from its owners. Who is not liable for the debts or other problems of the corporation beyond the money they invest in it by buying ownership shares, or stock, in the company. Stockholders Alien Corporation does business in the US but is chartered (incorporated) in another country domestic coporation does business in the state in which they are chartered (incorporated) Foreign Corporations do business in one state but are chartered in another. About one-third of all corporations are chartered in Delaware because of its relatively attractive rules for incorporation. A foreign corporation must register in states where it operates. closed (private) corporation have stock that is held by a few people and isn't available to the general public open (public) corporation Sells stock to the general public. General Motors and ExxonMobil are examples of public corporations quasi-public corporation are chartered by the government as an approved monopoly to perform services to the general public. public utilities are examples. Professional Corporation owned by those who offer professional services (doctors, lawyers, etc.) Shares in professional corporations aren't publicly traded. nonprofit (or not-for-profit) corporation don't seek personal profit for their owners multinational corporation operate in several countries Advantages of a corporation 1. Limited liability Disadvantages of a corporation 1. Initial cost The process of forming a corporation varies somewhat from state to state -The corporation's name. corporations bylaws -How, when, and where shareholders' and directors' meetings are held, and how long directors are to serve. S corporation A unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships. In order to qualify for an S corporation, 1. Have no more than 100 shareholders. (All members of a family
count as 1 shareholder.) How many years does it take to operate again when an S corporation loses its S status? An S corporation that loses its S status may not operate under it again for at least five years limited liability company (LLC) A company similar to an S corporation but without the special eligibility requirements. LLCs Advantages include: 1. Limited liability LLC's Disadvantages 1. No stock merger The result of two firms forming one company. acquisition One company's purchase of the property and obligations of another company. vertical merger The joining of two companies involved in different stages of related businesses. horizontal merger The joining of two firms in the same industry. conglomerate merger The joining of firms in completely unrelated industries. leveraged buyout (LBO) An attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing. franchise agreement An arrangement whereby someone with a good idea for a business sells the rights to use the business name and sell a product or service to others in a given territory. franchisor A company that develops a product concept and sells others the rights to make and sell the products. franchise The right to use a specific business's name and sell its products or services in a given territory. franchisee A person who buys a franchise. Advantages of Franchising 1. Management and marketing assistance Diadvantages of Franchising 1. Large start-up costs cooperative (co-op) A business owned and controlled by the people who use it—producers, consumers, or workers with similar needs who pool their resources for mutual gain. The easiest type of business entity to form is a sole proprietorship Many people do not like working for someone, so being your own ____________ is an advantage of sole proprietorships. boss If your company debts or damages are solely your responsibility you could be experiencing the disadvantage associated with owning a sole proprietorship called __________ __________. unlimited liability Mark, Cal and Aidan have decided to form a business where all owners will share in operating the business and in assuming liability for the business debts. They are most likely forming a(n) ____________ partnership. general True or false: Partnerships are less likely to survive than sole proprietorships. False If you start and manage a landscaping business on your own, you have likely started a: sole proprietorship A partnership _________ can spell out the requirements of terminating a partnership. agreement True or false: The main advantage of a sole proprietorship is ease of start up. true A state-chartered legal entity with authority to act and have liability separate from its owners is a: corporation In a sole proprietorship, any debts or damages incurred by the business are your personal debts and you must pay them. This disadvantage is known as: unlimited liability In a general partnership, all partners share the responsibility for operating the business and assume liability An advantage of the separation of ownership from management in corporations is that the company can raise money from investors but the investors: are not involved in daily operations An advantage of partnerships is a longer ____________ rate than sole proprietorships, because they become more disciplined and the business's life is based on all the partners. survival Termination of a partnership is difficult without a(n) ___________ agreement. partnership A major disadvantage of the corporate form deals with the tax situation called ___________ taxation. double A corporation is a legal __________ with authority to act and have liability separate from its owners. entity Which of the following are true regarding the process of forming a corporation. -The articles of incorporation must be filed in the state in which the company will be
incorporated A(n) ___________ is a state-chartered entity that exists in the eyes of the law and controls risk to the owners of the firm. corporation A unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships is: an S corporation Stockholders are ________ from the managers and employees of the firm because they are not actively involved in the operations of the firm. separate, independent, or separated Studies have indicated that partnerships are four times more likely to succeed than: sole proprietorship Which are considered disadvantages of incorporating? -Initial Cost Don wanted to incorporate his business and liked the attributes of an S-corporation, however, he did not feel the eligibility requirements would work for his purposes. He is likely to choose to form a(n) __________ __________ company. limited liability A corporation is formally formed with: articles of incorporation and bylaws A unique government creation that looks like a corporation but is taxed like a sole proprietorship or partnership is called a(n) __________ corporation. S An LLC submits a written operating agreement, similar to a(n) ____________ agreement, describing how the company is to be operated. partnership Rank the order in which members of a corporation are chosen in order to separate ownership from management. Start at the top of the managerial hierarchy. ... The result of two firms joining to form one is called a(n): merger A(n) ______ is where one company purchases the property and obligations of another. acquisition A merger that joins two companies involved in different but related levels of an industry is a(n) ______ merger. vertical LLC's are considered to have operational flexibility because while they must submit articles of organization,they are not required to: keep minutes or hold annual meetings Students also viewedch 530 terms learnsmart chapter 5 how to form a business32 terms Chapter 4: How to Form a Business76 terms Connect 535 terms Other sets by this creatorChapter 465 terms Chapter 3104 terms Chapter 2123 terms Chapter 1105 terms Recommended textbook solutionsInformation Technology Project Management: Providing Measurable Organizational Value5th EditionJack T. Marchewka 346 solutions
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Anderson's Business Law and the Legal Environment, Comprehensive Volume23rd EditionDavid Twomey, Marianne Jennings, Stephanie Greene 369 solutions Other Quizlet setsSEX:EVOLUTIONARY HORMONAL AND NEURAL BASES, , Home…35 terms Geology Midterm157 terms RD : responsabilité du fait des choses19 terms Which are considered disadvantages of incorporating quizlet?Disadvantages of incorporating are: Initial cost, extensive paperwork, double taxation, two tax returns, size, difficulty to terminate, possible conflict with stockholders and board of directors.
Which of the following is a disadvantage of incorporating a business?One of the most prominent disadvantages of incorporation is that company profits are often double taxed. Corporations are taxed first on their net taxable income.
What are some of the disadvantages of an LLC quizlet?The disadvantages include unlimited liability, limited financial resources, difficulty in management, overwhelming time commitment, few fringe benefits, limited growth, and limited life span.
What are the major advantages and disadvantages of incorporating a business quizlet?The advantages include more financial resources, shared management and pooled knowledge, and longer survival. The disadvantages include unlimited liability, division of profits, disagreements among partners, and difficulty of termination. What are the major advantages and disadvantages of incorporating a business?
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Select all attributes that make the initial cost of incorporating a disadvantage Quizlet
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