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61 Cards in this Set
- Front
- Back
5 factors for selecting a business form CLTCT
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Control of the business, liability to the owners, tax consequences, capitalization, and transferability of ownership
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More control =
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more personal of a business
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the owner in an unlimited liability has, while the corporate controlled has
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max control, limited control
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Whats an example of a limited liability owner?
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stock holder
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describe unlimited liability?
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its personal debt, they can take the assets and house
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whats capitalization
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how easy is it to raise funds
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Most businesses in the US are under this form, describe it
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Sole proprietorship, a business owned by one owner
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describe startup, control, liability, tax consequences, capitalization, and transferability in a sole proprietorship
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easy- no govt reporting, absolute control, unlimited personal liability, total pass through on taxes, very limited captialization, and transferability is a major issue
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This is a business for profit owned by 2 or more people as co-owners
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partnership
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describe startup, control, liability, tax, and transferability in a partnership?
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no filing and more capital make it easy to start, both partners have equal power, unlimited liability, tax passes through, transferability- all you can sell is your right to profits and business control goes to other partners
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In a partnership, if one partner signs a contract then
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the other partners, whether they are aware of it or not, are legally bound to the contract as well. Each partner has 100% control
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Describe liability for parnterships
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both partners are liable, the creditor can collect from both equally or only one, if the collection is unfair, its common to see sueing involved
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Tax for a partnership
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passes through, each partner is taxed on their personal income sheet
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how does transferability take place in a partnership?
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You can only sell your rights to profits, the control of the company goes to the other partners
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Describe a limited partnership?
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you must file with the state for this business, partnership where some partners only have limited liability
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2 kinds of partners and the difference in a limited partnership
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limited- no power or control, they are only liable for their investment in the company, General- has control and runs the day to day, have unlimited liability
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describe capitalization, taxation, and transferability of a limited partnership
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capitalization is greatly increased, all profits pass through to the owners personal income statement, and transferability of ownership can be a problem, but the limited partnership usually has a contract with details
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What is a limited liability limited partnership?
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the same as a limited partnership, except the general also has limited liability
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whats a limited liability partnership?
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the old doctor, lawyer, architects used this. Each partner is only liable for what they have invested, if one of the partners blows it, the others don't lose
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Which business type is the most profitable? its an artificial entity that is legally seperate
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corporations
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corporations need to be permitted by the state government?
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true
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who are the owners in corporations? whats this mean?
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stock holders, they aren't personally liable for debts
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Describe control, capitalization, tax, and transferability in corps
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you loss control when you sell ownership, massive pool of capitalization, stocks are extremely transferable, and double taxations
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describe the corporate veil?
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the owners are essentially away from the company "under a veil"
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What are close and "S" Corps?
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corporations where stock is not publicly traded, family corps
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what was the reason for s corps?
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encouraged corporate startup and limited liability. also the corp pays no tax, its straight pass through
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Transferability and tax in a close corp?
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very hard to transfer and same tax as regular corps
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4 characteristics of S corps?
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can't have multiple stock classes like regular corps, must be a standalone corp, all stockholders must be US citizens, and no more than 100 stockholders (limits capital)
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Is there any practical reason for S corps?
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no
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whats the best of all worlds for business
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LLC
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whats it require to start an LLC
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75$ and 4 pages of paperwork
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in a LLC stockholders and owners have
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limited liability
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describe tax and capitalization in LLC
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tax is the same as a partnership, LLC allows you to capitalize but stocks are not traded publicly
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Whats the modern form of business for lawyers and docs
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professional corporations
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Describe a professional corp?
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total protection of personal liability and taxed like a corp except, profits are distributed to the owners which means only personal tax, no business tax
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This is the first step in the process of terminating a partnership?
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dissociation
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this business form was created by federal law?
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S Corp
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the ggeneral partner is liable in this business form
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limited partnership
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this business form was created by state law?
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close corp
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This is when a partner leaves the partnership
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dissolution
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sole proprietorships must file a tax return
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f
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creditors of a partnership must first seek recovery from partners assets before going after the personal assets of a partner
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t
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ownership in a partnership is not transferable
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t
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In both a limited partnership and a LLLPthe partners are not personally liable for the debts of the partnership?
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F
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venture capitalists often require companies they own to become llc's before going public
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F
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This is the first step in the process of terminating a partnership?
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dissociation
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this business form was created by federal law?
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S Corp
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the ggeneral partner is liable in this business form
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limited partnership
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this business form was created by state law?
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close corp
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This is when a partner leaves the partnership
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dissolution
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sole proprietorships must file a tax return
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f
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creditors of a partnership must first seek recovery from partners assets before going after the personal assets of a partner
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t
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ownership in a partnership is not transferable
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t
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In both a limited partnership and a LLLPthe partners are not personally liable for the debts of the partnership?
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F
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venture capitalists often require companies they own to become llc's before going public
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F
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If a partner is offered an opportunity that is related to the partnership business, he must first seek permission of the other partners before accepting it
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F
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If a partner withdraws does it automatically dissolve a term partnership?
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T
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While working part time at a supercorp resturant, jenna spills a bucket of hot french fries on a customer, whose liable?
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both jenna and the corp
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A dissociation occurs when
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a partner quits
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All members of a group are liable, they can be sued as a group, or any one of them can be sued individually for the full amount owing
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joint and several liability
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Shareholders of S corps have both the _____ _____ off a corp and the tax status of a
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limited liability, partnership
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