Chapter 5 Connect Smartbook

Rank the forms of business ownership based on the ease of starting.

1 sole proprietorship, partnership, corporation

Limited Liability Company (LLC)

A company similar to an S corporation but without the special eligibility requirements.

Franchisor

A company that develops a product concept and sells others the rights to make and sell the products.

General Partnership

A partnership in which all owners share in operating the business and in assuming liability for the business's debts.

Limited liability partnership

A partnership that limits partners' risk of losing their personal assets to only their own acts and omissions and to the acts and omissions of people under their supervision.

Master Limited Partnership (MLP)

A partnership that looks much like a corporation (in that it acts like a corporation and is traded on a stock exchange) but is taxed like a partnership and thus avoids the corporate income tax.

limited partnership

A partnership with one or more general partners and one or more limited partners.

S corporation

A unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships

General Partner

An owner (partner) who has unlimited liability and is active in managing the firm.

What are some disadvantages to a corporation?

Cost of forming a corporation, double taxation

aquisition

One company's purchase of the property and obligations of another company.

Which of the following is considered a disadvantage of a sole proprietorship?

Unlimited liability

Conventional (C) Corporation

a state-chartered legal entity with authority to act and have liability separate from its owners

franchise agreement

an arrangement whereby someone with a good idea for a business sells the rights to use the business name and sell a product or service to others in a given territory

Leveraged Buyout (LBO)

an attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing

Limited partner

an owner who invests money in the business but does not have any management responsibility or liability for losses beyond the investment

When producers consumers or workers with similar needs pool their resources for mutual gain they start an ______

cooperative

Mark, Cal and Aidan have decided to form a business where all owners will share in operating the business and in assuming liability for the business debts. They are most likely forming an ________ partnership.

general

LLCs do have to submit articles of organization and an operating agreement, but do not have to:

hold annual meetings, keep minutes, file written resolutions

If the sole proprietor dies, is incapacitated, or retires, the business no longer exists. This disadvantage of a sole proprietorship is called ____ like span.

limited

conglomerate merger

the joining of firms in completely unrelated industries

vertical merger

the joining of two companies involved in different stages of related business.

horizontal merger

the joining of two firms in the same industry

limited liability

the responsibility of a business's owners for losses only up to the amount they invest; limited partners and shareholders have limited liability

unlimited liability

the responsibility of business owners for all of the debts of the business

merger

the result of two firms forming one company

Franchise

the right to use a specific business name and sell its product or services in a given territory.