Term
| Corporation Easy Description |
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Definition
| The Entity of a Company is called a corporation which is like you in that it can own property, enter into contracts to buy and sell goods, it can hire and fire employees, can open bank accounts and engage in complex Financial transactions. |
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| Make money for its owners. |
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| Protection of personal assets from claims. |
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| Operate under a license agreement (Contract) whereby they agree to follow certain standards set by the franchisor, purchase their goods from the franchisor, and maybe share either a royalty fee or percentage of profits with the franchisor. |
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| Non Profit Organizations - Paying Taxes |
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Definition
| They do not have to pay any taxes if they meet strict qualifications under IRS guidelines to become a "501 organization, named for the section of the IRS code that grants nonprofit status. |
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Term
| Can you change the Type of Business Entity Choice after first selecting it at the beginning of your business? |
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Definition
| Yes you can but its very difficult to do so. Thats why its very important to do your research before making this choice. |
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| A business that is owned and run by one person and in which there is no legal distinction between the owner and the business. |
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Term
| Example of Sole Proprietorship |
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Definition
| Lily is home from college on summer break, she helps her parents out by doing the yard work for them, she is good at it and the neighbors notice that. They all hire her to do theirs as well, she has so much work she has to hire people to help her. She names her company Lily's landscaping. There is no difference between Lily and Lily's Landscaping. |
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Definition
| is financial capital provided to early-stage, high-potential, high risk, growth startup companies. The venture capital fund makes money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as biotechnology, IT, software, etc. |
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Term
| Initial Public Offering (IPO) |
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Definition
| The first time a corporation sells its shares to members of the public. |
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| A nonpublic offering in which a business sells securities to a few chosen and qualified investors to raise capital. |
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| An undesirable situation where if the debts of the business exceeds it ability to pay, creditors may reach the personal assets of the business owner. |
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| Key Takeaway of Sole Proprietorships |
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Definition
| Sole proprietorships are the most common way of doing business in the United States. Legally, there is no difference or distinction between the owner and the business. The legal name of the business is the owner’s name, but owners may carry on business operations under a fictitious name by filing a d.b.a. filing. Sole proprietors enjoy ease of start-up, autonomy, and flexibility in managing their business operations. On the downside, they have to pay ordinary income tax on their business profits, cannot bring in partners, may have a hard time raising working capital, and have unlimited liability for business debts. |
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Definition
| refers to an association of persons or an unincorporated company with the following major features: Created by agreement, proof of existence and estoppel. Formed by two or more persons. The owners are all personally liable for any legal actions and debts the company may face. |
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| is a voluntary contract between two or among more than two persons to place their capital, labor, and skills, and corporation in business with the understanding that there will be a sharing of the profits and losses between/among partners. |
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| is a legally binding agreement between co-owners of a business that governs the situation if a co-owner dies or is otherwise forced to leave the business, or chooses to leave the business |
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| is a business entity that is separate from its owner but which chooses to be disregarded as separate from the business owner for federal tax purposes. |
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| reporting total income and losses for the partnership, and how those profits and losses are allocated among the general partners. |
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Term
| Jointly and severally liable |
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Definition
| then they are each liable up to the full amount of the relevant obligation. So if a married couple take a loan from a bank, the loan agreement will normally provide that they are to be "jointly liable" for the full amount. |
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Definition
| is a form of partnership similar to a general partnership, except that in addition to one or more general partners (GPs), there are one or more limited partners (LPs). It is a partnership in which only one partner is required to be a general partner. |
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Term
| Key Takeaways of General Partnership |
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Definition
| A general partnership is formed when two or more persons agree to share profits and losses in a joint business venture. A general partnership is not a separate legal entity, and partners are jointly and severally liable for the partnership’s debts, including acts of malpractice by other partners. Income from a general partnership flows through to the partners, who pay tax at the ordinary personal income tax rate. In most states general partners can also bring in limited partners, creating a limited partnership. Limited partnerships must be formed in compliance with state statutes. Limited partners enjoy limited liability but generally cannot participate in day-to-day management of the business. |
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| Forming of a new corporate. The corporation may be a business, a non-profit organization, sports club, or a government of a new city or town. |
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| A type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings. |
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| usually entitles the owner to vote at shareholders' meetings and to receive dividends |
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Definition
| generally does not have voting rights, but has a higher claim on assets and earnings than the common shares. For example, owners of preferred stock receive dividends before common shareholders and have priority in the event that a company goes bankrupt and is liquidated. |
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Definition
| is generally a fungible, negotiable financial instrument representing financial value.[1] Securities are broadly categorized into: debt securities (such as banknotes, bonds and debentures). equity securities, e.g., common stocks; derivative contracts, such as forwards, futures, options and swaps. |
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Term
| articles of incorporation |
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Definition
| (sometimes also referred to as the Certificate of Incorporation or the Corporate Charter) are the primary rules governing the management of a corporation in the United States and Canada, and are filed with a state or other regulatory agency. |
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Term
| What the articles of Incorporate usually includes |
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Definition
| The name has to be unique and distinctive, and must typically include some form of the words “Incorporated,” “Company,” “Corporation,” or “Limited.” The founders must state their identity, how long they wish the company to exist, and the company’s purpose. Under older common law, shareholders could sue a company that conducted business beyond the scope of its articles (these actions are called ultra vires), but most modern statutes permit the articles to simply state the corporation can carry out “any lawful actions,” effectively rendering ultra vires lawsuits obsolete in the United States. The founders must also state how many shares the corporation will issue initially, and the par value of those shares. (Of course, the company can issue more shares in the future or buy them back from shareholders.) |
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Definition
| Registered to do business in one state of the United states. |
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| s a term used in the United States for an existing corporation that is registered to do business in a state or other jurisdiction other than where it was originally incorporated |
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Definition
| Small amount of stock holders and can more easily make company changing decisions much more rapidly than a publicly traded company. |
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| publicly traded corporation |
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Definition
| Large amount of shareholders and changes take majority vote. |
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| When a corporation has all of its stocks owned by another corporation. |
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| A corporation may be referred to as an affiliate of another when it is related to it but not strictly controlled by it, as with a subsidiary relationship, or when it is desired to avoid the appearance of control |
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Definition
| is the liability for a landowner for certain torts that occur on the real property. This can range from things from injuries caused by "liable for injuries caused by a variety of hazardous conditions, including open excavations, uneven pavement, standing water, crumbling curbs, wet floors, uncleared snow, icy walks, falling objects, inadequate security, insufficient lighting, concealed holes, improperly secured mats, or defects in chairs or benches". |
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Definition
| A transaction in which the buyers and sellers of a product act independently and have no relationship to each other. The concept of an arm's length transaction is to ensure that both parties in the deal are acting in their own self interest and are not subject to any pressure or duress from the other party. |
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Term
| pierce the corporate veil |
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Definition
| is a legal decision to treat the rights or duties of a corporation as the rights or liabilities of its shareholders. Usually a corporation is treated as a separate legal person, which is solely responsible for the debts it incurs and the sole beneficiary of the credit it is owed. Common law countries usually uphold this principle of separate personhood, but in exceptional situations may "pierce" or "lift" the corporate veil. |
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Term
| Example of Piercing the Corporate Veil |
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Definition
| A simple example would be where a businessman has left his job as a director and has signed a contract to not compete with the company he has just left for a period of time. If he set up a company which competed with his former company, technically it would be the company and not the person competing. But it is likely a court would say that the new company was just a "sham", a "fraud" or some other phrase,[1] and would still allow the old company to sue the man for breach of contract. A court would look beyond the legal fiction to the reality of the situation. |
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Definition
| is a contractual right to acquire certain property newly coming into existence before it can be offered to any other person or entity.[1] Also called a "first option to buy. |
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Definition
| The result when a corporation issues additional shares, resulting in reduction of the percentage of the corporation owned by shareholders. |
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Definition
| Rules and Regulations for a corporation. |
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Definition
| is a body of elected or appointed members who jointly oversee the activities of a company or organization |
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Term
| shareholder derivative lawsuit |
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Definition
| is a lawsuit brought by a shareholder on behalf of a corporation against a third party. Often, the third party is an insider of the corporation, such as an executive officer or director. Shareholder derivative suits are unique because under traditional corporate law, management is responsible for bringing and defending the corporation against suit. |
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Definition
| is a bond issue by a corporation. It is a bond that a corporation issues to raise money effectively in order to expand its business.[1] The term is usually applied to longer-term debt instruments, generally with a maturity date falling at least a year after their issue date. (The term "commercial paper" is sometimes used for instruments with a shorter maturity.) |
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Definition
| board members are generally immune from second-guessing for their decisions as long as they act in good faith and in the corporation’s best interests. Board members owe a fiduciary duty to the corporation and its shareholders, and therefore are presumed to be using their best business judgment when making decisions for the company. |
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Definition
| Insurance for the Officers and Directors on the board. |
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Definition
| is the levying of tax by two or more jurisdictions on the same declared income (in the case of income taxes), asset (in the case of capital taxes), or financial transaction (in the case of sales taxes). This double liability is often mitigated by tax treaties between countries. |
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Term
| Employer Identification Numbers (EIN) |
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Definition
| is the corporate equivalent to a Social Security Number, although it is issued to anyone, including individuals, who has to pay withholding taxes on employees. |
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Term
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Definition
| A dividend tax is an income tax on dividend payments to the stockholders (shareholders) of a company. |
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Term
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Definition
| for United States federal income tax purposes, is a corporation that makes a valid election to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code. In general, S corporations do not pay any federal income taxes. Instead, the corporation's income or losses are divided among and passed through to its shareholders. The shareholders must then report the income or loss on their own individual income tax returns. |
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| Key Takeaways of Corporations |
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Definition
| A corporation is a separate legal entity. Owners of corporations are known as shareholders and can range from a few in closely held corporations to millions in publicly held corporations. Shareholders of corporations have limited liability, but most are subject to double taxation of corporate profits. Certain small businesses can avoid double taxation by electing to be treated as S corporations under the tax laws. State law charters corporations. Shareholders elect a board of directors, who in turn appoint corporate officers to manage the company. |
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Term
| limited liability company (LLC) |
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Definition
| is a flexible form of enterprise that blends elements of partnership and corporate structures. It is a legal form of company that provides limited liability to its owners in the vast majority of United States jurisdictions. LLCs do not need to be organized for profit |
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Term
| Owners of limited liability company (LLC)are called |
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Definition
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Term
| What is the least amount of members a Limited Liability Company can have? |
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Definition
| One. Just like Sole Proprietorship it can be started with just one person. |
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Definition
| is very flexible. Essentially, every tax year the LLC can choose how it wishes to be taxed. It may want to be taxed as a corporation, for example, and pay corporate income tax on net income. Or it may choose instead to have income “flow through” the corporate form to the member-shareholders, who then pay personal income tax just as in a partnership. Sophisticated tax planning becomes possible with LLCs because tax treatment can vary by year. |
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Term
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Definition
| is an agreement among limited liability company ("LLC") Members governing the LLC's business, and Member's financial and managerial rights and duties. Many states in the United States require an LLC to have an Operating Agreement. LLCs operating without an Operating Agreement are governed by the State's default rules contained in the relevant statute and developed through state court decisions. |
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Definition
| Since they are a separate legal entity from their members, members must take care to interact with LLCs at arm’s length, because the risk of piercing the veil exists with LLCs as much as it does with corporations. Fundraising for an LLC can be as difficult as it is for a sole proprietorship, especially in the early stages of an LLC’s business operations. Most lenders require LLC members to personally guarantee any loans the LLC may take out. Finally, LLCs are not the right form for taking a company public and selling stock. Fortunately, it is not difficult to convert an LLC into a corporation, so many start-up business begin as LLCs and eventually convert into corporations prior to their initial public offering (IPO). |
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Term
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Definition
| The limited liability company (LLC) represents a new trend toward business organization. It allows owners, called members, to have limited liability just like corporations. Unlike corporations, however, LLCs can avoid double taxation by choosing to be taxed like a partnership or sole proprietorship. Unless a business wishes to become publicly traded on a stock exchange, the LLC is probably the most flexible, most affordable, and most compatible form for doing business today. The limited liability partnership (LLP) is similar to the LLC, except it is designed for professionals such as accountants or lawyers who do business as partners. |
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Term
| Forms of Business Organization |
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Definition
sole proprietorship
general partnership
limited partnership
C corporation
S corporation
limited liability company |
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Term
| Advantages of sole proprietorship |
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Definition
| A sole proprietor has complete control and decision-making power over the business. Sale or transfer can take place at the discretion of the sole proprietor. No corporate tax payments. Minimal legal costs to forming a sole proprietorship. Few formal business requirements |
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| Disadvantages of sole proprietorship |
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Definition
| The sole proprietor of the business can be held personally liable for the debts and obligations of the business. Additionally, this risk extends to any liabilities incurred as a result of acts committed by employees of the company. All responsibilities and business decisions fall on the shoulders of the sole proprietor. Investors won't usually invest in sole proprietorships. |
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| Advantages of General Partnership |
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Definition
| Simplified Taxes and Less Paperwork |
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Term
| Disadvantages of General Partnership |
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Definition
| Legal Liability for all the business's obligations and debts. Management Issues, because partners can make investments from their personal fiances and the money invested is then owned by all partners, its easy for questions of reimbursment to arrise. |
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| Advantages of a Limited Partnership |
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Definition
| Tax Benefits, Liability Limits, The General Partners take charge, no turnover issues, less paperwork, and Investment opportunities. |
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| Disadvantages of a Limited Partnership |
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Definition
| Risks to the General Partners, all obligations and debts go to them. Compliance Challenges such as annual meetting with members. |
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Term
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Definition
| refers to any corporation that, under United States income tax law, is taxed separately from its owners. It is distinguished from an S corporation, which is not taxed separately. Most major companies (and many smaller companies) are treated as C corporations for U.S. income tax purposes. |
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| Advantages of a C corporation |
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Definition
| Liability protection, Attracting investors, Taxes, Lower tax rate, Perpetual existence |
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Term
| Disadvantages of a C corporation |
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Definition
| Higher costs, Increased paperwork, Double taxation |
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Term
| Advantages of a S corporation |
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Definition
| Eliminating double taxation, Protection from liability, More room for investors, Easier accounting rules. |
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Term
| Disadvantages of a S corporation |
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Definition
| Rules and fees, Shareholder restrictions, Salary requirements |
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Term
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Definition
| More flexibility, Limited liability, Tax options, Fewer compliance issues, Perpetual existence, Investors |
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