BLAW 3310 Chapter 12- Business Organizations

Assumed name certificate (d/b/a)

"Doing business as". A company is said to be "doing business as" when the name under which they operate their business differs from its legal, registered name. Some states require dba or fictitious business name filings to be made for the protection of consumers conducting business with the entity. Ex: John Smith doing business as Dandy donuts.

Members

A LLC is usually formed by 2 or more members ( only 1 required in Texas and Florida).

Franchise contract

A contractual relationship where the owner of a franchise provides a licensed privilege to a franchisee to do business under their name

Duration of corporation

A corporation has perpetual existance (Unlimited term of existence).

FEIN

A federal employer identification number (EIN), also sometimes referred to as a tax identification number, is a nine-digit code that businesses use to identify themselves for tax reporting, banking, and other purposes.

Personal liability shield (Corporate veil)

A legal concept that separates the personality of a corporation from the personalities of its shareholders, and protects them from being personally liable for the company's debts and other obligations.

Sole proprietorships

A person doing business for himself/herself

Registered agent

A registered agent is a responsible third-party who is registered in the same state in which a business entity was established and who is designated to receive service of process notices, correspondence from the Secretary of State, and other official government notifications, usually tax forms and notice of lawsuits

Limited liability company

An LLC is not a corporation; it is a legal form of a company that provides limited liability to its owners in many jurisdictions.

Articles of Incorporation

Articles of incorporation, also referred to as the certificate of incorporation or the corporate charter, act as a charter to establish the existence of a corporation in the United States and Canada, and are filed with the Secretary of State, or other company registrar.

LLC

Corporate structure whereby the members of the company cannot be held personally liable for the company's debts or liabilities. Limited liability companies are essentially hybrid entities that combine the characteristics of a corporation and a partnership or sole proprietorship.

S corporation election

Corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. This allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains and passive income at the entity level.

Shareholders/directors/employees and officers

Employees are generally not part of the basic legal structure of the entity. The shareholders' own the corporation. The board of directors manage the corporation. Corporate officers are elected by majority vote which make decisions on behalf of the corporation.

Operating agreement (compare to bylaws of a regular corporation)

For LLCs that document is your operating agreement. For Corporations, Social Purpose Corporations, Benefit Corporations, and Nonprofit Corporations, that document is your bylaws. The operating agreement of an LLC is the contract entered into between all of the members (aka owners) of the LLC

Franchisor/franchisee

Franchisor- owner of a franchise. Franchisee- individual or company that holds a franchise

Liability of sole proprietor

If your business incurs debts that it cannot pay from the profits, you are personally liable and responsible for payment. Creditors may sue you personally to satisfy the debt. The opposite is also true

partners liability in both general and limited partnerships

In a limited partership, liability is limited as oppose to a general partnership were both partners have unlimited liability

Business Judgement rule

Makes directors and managers immune from liability when problems result from honest mistakes in judgment, so long as there is a reasonable basis for the decisions.

Membership interest

Members have membership interest (somewhat similar to owning a stock in a corporation).No restrictions on number of members but usually under 30.

Limited partners

Partner that is only liable for firm debt he/she has agreed to contribute

General partners

Partnership arrangement by which partners conducting a business jointly have unlimited liability, which means their personal assets are liable to the partnership's obligations

Limited partnership

Partnership consisting of a general partner, who manages the business and has unlimited personal liability for the debts and obligations of the Limited Partnership, and a limited partner, who has limited liability but cannot participate in management.

Double taxation

Profits of corporation and shareholders' shares of profits are both taxed

Tax treatment

Proprietorship- Profits taxed to owner as individual. Partnership- Profits taxed to each owner's profits. Corporation- Double taxation; profits of corporation and share holders' shares of profits are both taxed. Limited Liability Company- If IRS conditions are met, same as proprietorship.

Respondeat Superior doctrine

Respondeat superior (Latin: "let the master answer") An employer can be liable for the authorized or unauthorized intentional negligent torts of agents or employees who were acting within the scope of employment. Ex: an employee carelessly drops a heavy box on a customer, the business may be liable or if they hire someone with a criminal background.

Franchise rule of FTC and disclosures

The Federal trade Commission requires franchisors' to disclose material facts that a prospective franchisee needs in order to make an informed decision prior to a sale. Prevents deception in sales of franchises.

Principal place of business

The primary location where a taxpayer's business is performed. The principal place of business is generally where the business's books and records are kept and is often where the head of the firm - or at least upper management - is located.

Texas Secretary of State

When forming a limited partnership, partners must execute a written agreement, called a certificate of limited partnership, and file it with appropriate state official, usually the Secretary of State

Bylaws

a rule made by a company or society to control the actions of its members

Charter

a written grant by a country's legislative or sovereign power, by which an institution such as a company, college, or city is created and its rights and privileges defined