Entrepreneur law chapter 19

S corporation

An ________ is taxed as a pass-though entity, so only taxed once, the corporation does not pay taxes, the shareholders pay taxes based on their proportional shares of the corporation income

alter ego theory

_____ applies when the owners of the corporation have so mingled their own affairs with those of the corporation that the corporation does not exist as a distinct entity anymore

general partners

______ of a limited partnership remain jointly and severally liable for partnership obligations, and are also responsible for the management of the partnership

undercapitalization theory

________ applies when the corporation is a separate entity, but its deliberate lack of adequate capital allows it to skirt potential liabilities

limited partners

_________ assume no liability for partnership debts beyond the amount of capital they have contributed

articles of incorporation

as a separate entity, it has its own name and operates with specified powers to achieve the specific purposes set out in its _______________

limited liability company (LLC)

combines the tax advantages of a pass-though entity with limited liability advantages of a corporation

C or S

corporation can be set up as either an ______ or a _______

shareholders

corporations are owned by _________ who have purchased an ownership stake in the business

dissolution

if partners want to terminate the partnership, they will go through a _______, occurs when the partner no longer carry on the business together

winding up

involves settling the accounts and liquidating assets of the partnership for purposes of making distributions and terminating the partnership

limited partnership

is a special type of partnership consisting of two categories of partners (general and limited)

corporation

is an organization authorized by state law to act as a legal entity distinct from its owners

general partnership

is created when two or more person agree to place their money, efforts, labor, or skills, in a business and to share the profits and losses

limited liability partnership

is designed primarily for groups of professionals, such as law firms or accounting firms

sole proprietorship liability

is responsible for everything in the business

sole proprietorship

is when one individual owns all of the assets, of the business and is solely and personally liable for all of its debts, contract obligations, and tort liabilities

pass-though entity

is when the profits and losses earned by a business organization are not taxed separately from the individuals involved with the business organization, the profits and losses pass through to the individuals and they report it on their own income taxes

C Corporation

it is called a _________ because it is taxed according to Subchapter C of the internal Revenue Code, is subject to two levels of taxation (corporate and shareholders)

liability in a partnership

may be liable, partners may be liable, for the obligations of the partnership, even though the partnership is considered a separate entity, so partners can be held jointly and severally liable for liabilities to contract disputes, torts or debts

termination

occurs when all the partnership affairs are wound up and the partners authority to act for the partnership become finally extinguished

one level

sole proprietorship pays only ______ if income tax

-death -bankruptcy -selling -closing of business

sole proprietorship will end on proprietors ?

taxes in a partnership

taxed on one level, does not pay income tax as a separate entity although it is considered a separate entity

board of directors

the __________ who are elected by the shareholders, are the central decision-making authority

vicarious liability and malpractice

the main function of the LLP os to insulate its partners from ______ for certain partnership obligations, such as liability arising from the _______ or negligent or wrongful conduct of another partner

managers

the members elect the ________, who are like a board of directors for a corporation, and are responsible for managing the day to day business, property, and affairs

members

the owners of the LLC are called________

operating agreement

the rights, obligations, and powers of the members, mangers, and officers are set forth in the an ___________

secretary of states office

to create a corporation, must file the articles of incorporation with the ___________

certificate of formation

to form an LLC, must file a ________ with the secretary of state office, the name of the business must contain the initials LLS or the words limited liability company

secretary of states office

to set up a limited partnership, must file an application with the _____________

piercing the corporate veil

under certain circumstances, courts will hold shareholders liable for claims made against the corporation called_______

- no more than 100 shareholders -all shareholder must be US citizens -all shareholders must be actual people, not corporations -corporation must be domestic

what requirements must be met to be a S corporation