Chapter 20 Vocab - Business Law

An unincorporated business owned by one person

-Ease of formation
-Taxes

An organization that does not pay taxes on its profit but tax flows through to owners who pay taxes.

-Liability
-Limited Capital

-Limited Liability
-Transferability of interests
-Duration

-Logistics
-Taxes

encourage entrepreneurship by offering tax breaks

-Avoids Double Taxation (Flow-through entity)
-Limited Liability of shareholders

-One class of stock

-no more than 100 shareholders

-shareholders cannot be corps or partnerships

-Shareholders must be US citizens

-All shareholders must agree company should be S Corp

-small number of shareholders
-stock is not publicly traded
-shareholders play an active role in management
-entitled to special treatment under state law

-Limited Liability
-Flow-through entity (Not Double taxed)

A court holds members of an LLC personally liable for the debts of the organization

-Fail to observe formalities

-Commingle of Assets

-Fail to provide adequate capital

-Commit Fraud

Organizations pledge to behave in a socially responsible manner even as they pursue profits.

-2/3 vote of shareholders
-ensure social benefit
-report impact on website

Unincorporated Association of 2 or more co-owners who operate a business for profit

Each co-owner

Non-partners are held out to be partners and, therefore, are as personally liable as if they were partners

-Participants tell others they're partners
-3rd party relies on their "partnership"
-3rd party suffers

Partners who have a primary management responsibility for a partnership

When a partner leaves a partnership

A partnership for a limited purpose

A disclosure document that a franchisor must deliver to a potential purchaser