Term
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Definition
- Owned by one person
- Person and the company are viewed as one entity for tax and liability purposes
- Separate entity for accounting purposes
- Not a separate entity for legal purposes
- Has unlimited liability |
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Term
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Definition
| Court can order an owner to sell personal belongings to pay a proprietorship's debt. |
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Term
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Definition
- Owned by two or more people, called partners, which are jointly liable for tax and other obligations.
- Not legally separate from its owners
- Each partner's share of profits is reported and taxed on that partner's tax return. |
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Term
| Types of Limited Liability (3) |
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Definition
(1)Limited Partnership (LP)
(2)Limited Liability Partnership (LLP)
(3)Limited Liability Company (LLC) |
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Term
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Definition
| Includes a general partner(s) with unlimited liability and a limited partner(s) with liability restricted to the amount invested |
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Term
| Limited Liability Partnership (LLP) |
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Definition
| Restricts partners' liabilities to their own acts and the acts of individuals under their control. This protects an innocent partner from the negligence of another partner, yet all partners remain responsible for partnership debts |
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Term
| Limited Liability Company (LLC) |
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Definition
| Offers the limited liability of a corporation and the tax treatment of a partnership (and proprietorship). |
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Term
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Definition
- A business legally separate from its owner or owners
- Responsible for its own acts and its own debts
- Can conduct business with the rights, duties, and responsibilities of a person
-Acts through its managers, who are its legal agents
- Owners (shareholders) are not legally responsible for corporate acts and debts
-Has the disadvantage of Double Taxation
- An S corporation, a corporation with special attributes, does not owe corporate income tax. Owners of S corporations report their share of corporate income with their personal income.
-Ownership of all corporations is divided into units called sharesEquity of a corporation divided into ownership units; also called stock. or stockEquity of a corporation divided into ownership units; also called stock.
-When a corporation issues only one class of stock, we call it common stockCorporation’s basic ownership share; also generically called capital stock. (or capital stock). |
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Term
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Definition
(1) The corporation income is taxed and
(2) Any distribution of income to its owners through dividends is taxed as part of the owners' personal income, usually at the 15% rate |
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