CH 19 Forms of Business Organization

close corporation

1. elected in its charter to be close 2. small number of shareholders, <30

corporate charter

(aka articles of incorporation) most give broad power to engage in lawful business

low-profit limited liability company

L3C, for-profit company with a 'nonprofit soul'

corporation

authorized by state to act as a legal entity distinct of its owners

articles of organization

charter document for LLC

limited liability company

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

general partnership

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

limited liability partnership

designed for groups for professionals groups, pass-through taxation treatment

pass-through entity

don't pay income taxes at the corporate level ex- Sole proprietorship, LLP, LLC

board of directors

elected by shareholders, has central decision making authority

benefits corporation

for-profit corporation that uses power of business to solve social and environmental problems

Holmes v. Lerner

holmes had the idea for company and then lerner gave away most of the control of company so holmes sued that she was a partner and won

Sole Proprietorship

individual owns all of the assets of business and is solely and personally liable

general partner

jointly and severally liable for partnership obligations

managers

like board of directors, responsible for managing affairs of company

limited partners

no liability beyond the amount of capital the have contributed

joint venture

one-time partnership of two or more parties for a specific purpose

members

owners of an LLC

S Corporation

pass-through, not taxed on income, shareholders pay taxes on their shares of corporations income

C Corporation

pays tax on income generated by business and shareholders pay taxes on same income when given dividends

operating agreement

rights, obligations, and powers of members, manages and officers

winding up

settling the accounts and liquidating assets of partnership for purpose of making distributions and terminating the concern

limited partnership

special type of partnership with general and limited partner

master limited partnership

type of corp. that is able to raise money on public exchanges and doesn't pay income tax on corp. level, pass through entity

closely held corporation

typically small number of shareholders and absence of a market for its stock

termination

when all the partnership affairs are wound up and partners authority to act for partnership is extinguished