L201 Business Organization
limited liability partnership
All partners are limited partners and not responsible for the debts and other liabilities of other partners
Sole Proprietorship
a business owned and managed by a single individual
duty of loyalty and care
fiduciary duties of directors
limited vs unlimited liability of partnerships
unlimited personal liability for all partners
partnership
"association of two or more persons to carry on as co-owners of a business for profit"
Limited Liability Company
A business organization in which the business (not the owner) is liable for the company's debts. has limited liability like a corporation while being taxed like a partnership (pass-through taxation)
Corporation
A business owned by stockholders who share in its profits but are not personally responsible for its debts
limited partnership
A partnership with one or more general partners and one or more limited partners.
duration of corporation
Can have perpetual existence
Pass-through taxation
Earnings of the business are distributed to the business owners and those owners pay individual tax on the earnings.
Fiduciary Duty
That duty owed by an agent to act in the highest good faith toward the principal and not to obtain any advantage over the latter by the slightest misrepresentation, concealment, duress or pressure.
Duty of Loyalty
a fiduciary duty owed by an agent not to act adversely to the interests of the principal
corporation
are legal persons for most purposes (Ks, property, lawsuits)
partnerships
are legal persons for some purposes (Ks, property, lawsuits)
directors, officers, employees
chain of command for corporations
corporation
corporate taxation vs. pass-through taxation
partnerships
limited in various ways, can be dissolved by conduct of partners
partnerships
low. cannot transfer duties as partners, only profits from partnership
corporation
must be officially incorporated by filing a "charter" with the state authorities
partnerships
none. can be formed through informal agreements or actions
corporation
ownership is easily transferable, can sell shares on liquid markets at anytime
partnerships
pass-through taxation
corporation
shareholders "own" directors and officers "control"
limited vs unlimited liability in corporation
shareholders and managers have limited liability for contract and tort claims agains corporation
duty of care
the obligation people owe each other not to cause any unreasonable harm or risk of harm
joint ventures
when two or more companies join forces - sharing resources, risks, and profits, but not actually merging companies - to pursue specific opportunities
