Ownership as a business

What kind of business is this? -It has multiple members, but it could have as few as one, or as many as it wanted. - Members can be foreign entities, other companies, or people. - They are partially shielded from liability. - They enjoy a pass-through taxation structure

An LLC can have one or many members; members can be foreign entities, other businesses, or people; and it offers some liability protection and a pass-through taxation structure.

Grandma Lilly Homeowner is a shareholder in a business. Some key things to know about said business: The business has 250 shareholders; it is subject to double taxation; and it holds property in severalty

C corp

What protections do a sole proprietor's personal assets have from their business's losses and liabilities? a. they are shielded from business debts, but not personal debts b. up to $100K, as long as their income is under $500K c. it depends on how they registered the sole proprietorship with the state d. none. Sole proprietors are personally liable for their business

c

a company or a group of people who are considered a single entity under the law

corporations

legal entities that can be public, private, for-profit, or nonprofit. They are created in accordance with state law (by way of a charter or certificate of corporation) and exist only as a matter of law.

corporations

As a sole proprietorship, how does a business operate?

it operates as an extension of the owner - the business is incapable of owning real estate on its own.

What was the purpose of the uniform partnership act?

it was created to regulate how partnerships may be created, and be dissolved.

can be set up with one or more members. It's not a corporation, exactly — it's an "unincorporated association

limited liability company

Because a corporation is legally treated the same as a single person, the corporate ownership of real estate is...

ownership in severalty. individual stockholders are NOT labile for the corporation's debt

businesses that have a co-ownership structure. in this type of business, two or more people enter into a for-profit enterprise and share the risks and rewards of the business.

partnership

how are limited partners limited?

they are limited in terms of their degree of control, participation, & liability. These partners are basically operating like investors.

T/F - The limits in the limited liability of the partners in an LLP depend on the laws in the state where it was formed

true

Zoe Homeowner and her Uncle Zack have gone into business as investing partners. Uncle Zack is a wealthy-but-busy surgeon who watched his brother and sister-in-law raking in the cash from their real estate investments. He wanted to get some of that sweet moolah, but didn't have time to manage a property. Zoe, on the other hand, had plenty of time but not much cash to invest. They got to talking over a few too many glasses of eggnog one Christmas Eve, and Z Property Partners was born. -explain this partnership

Zack is a limited partner. He's more of an investor, and doesn't have much to do with day-to-day operations. Zoe is a general partner. She manages the partnership's activities and investments in a hands-on way. They have created a limited partnership

partnership in which each member equally assumes unlimited personal responsibility for the financial liabilities and obligations of the business.

general partnership

This is a way for property to be held in a partnership that establishes either tenancy in common or joint tenancy.

individual partners

is a kind of partnership arrangement. It's similar to a limited partnership, except that all partners have limited liability — there is no general partner.

limited liability partnership

Owners of an LLC are called...

members

This body aims to create uniform legislation that states can choose to adopt (or change, then adopt) - they created the uniform partnership act

national conference of commissioners on uniform state laws

Limited partnerships are business organizations comprised of....

one general partner & one limited partner

defines partnerships as an entity between partners and partner assets instead of an aggregate of those things.

revised uniform partnership act (RUPA)

business organization form assumed by an individual (or legal spouses as a single legal entity).

sole proprietorships

those in a corporation that fun the day-to-day operations of the corporate offices

the managers

In a sole proprietorship, who is liable for profits, debts, and obligations? What does this mean?

the owner of the business is liable. Because of this, the owner's personal assets are at risk in the event of business failure or debt.

those in a corporation that are shareholders & own the corporation stock

the owners

If a member of a general partnership business organization dies, goes bankrupt, or chooses to withdraw the partnership, what will happen

the partnership will need to either be dissolved or reorganized.

Say you are an LP (limited partner), & you deicide to put in an investment of $100,000. What does this mean?

this means that your liability is limited to $100,000 (i.e. you cant lose more than that)

T/F - It's sort of like a corporation that is treated as a partnership for tax purposes. These are limited to 100 shareholders or fewer.

true

T/F - RUPA also gave limited liability protections to general partners in limited liability partnerships

true

Orion was gifted a small investment property to manage on his 18th birthday. The gift was from his parents. He is operating this property under his name as a sole proprietor - since he is using his own name, what kind of paper work did he need to file? - Who is liable in this situation for any losses, debts or obligations generated from his property?

- none. paper work is only required if he entity is operating under a different name that is not your own - Because he is operating under his own sole proprietorship (and not the family company), he would be fully responsible for all of the above.

how are LLP s& LLCs similiar?

-they both enjoy the partial liability shield of a corporation and the pass-through taxation structure of a partnership

What are the two types of corporations?

1. S Corp 2. C Corp

Can a limited partnership survive the death or departure of either a general or other limited partner?

Yes - because of contingency plans set out in the partnership docs.

What is different about a partnership than a sole priprotirship?

a partnership is like a corporation in the face that it creates a separate entity that can be sued, and hold property separately from a partner's individual property (and protect that property from a partner's creditors)

the most common form that a corporation can take. It can be any size and can be multinational in its composition. it's structure is subject to double taxation: the corporation itself pays income tax, and the shareholders are taxed on dividends received

C corp

less-common corporation form passes its income or losses through to the shareholders. This type of corp reports their gains or losses on their individual tax returns.

S Corp

This grants each member of the partnership equal undivided interest in the property. The property is purchased and owned by the partnership as a separate

Tenants in partnerships

What is true about an LLC? 1. LLCs can have as many members as they would like 2. LLCs are not required to do all of the reporting that corporations are required to do 3. LLCs pass trough other entities

all of the above

those in a corporation that the owners of the company (shareholders) are represented by (these people are elected by shareholder)

the board (board of directors)

In many states, including Georgia, partnerships are regulated by what

the uniform partnership act

T/F - often times, a partnership will be made up of both general and limited partnerships

true

Why would someone create an LLC?

1. an LLC shields the all partners from personal liability 2. Because of an LLC's pass through taxation structure, the owner doesnt have to pay corporate tax (like a c corp) 3. Unlike an S corp, an an LLC can have as many board members as they want

What are the two types of partnerships?

1. limited 2. general *the partnership form that members choose will dictate the degree of control & liability each member of the partnership carries.

What are the type of business organizations you are likely to encounter?

1. sole proprietorships 2. partnerships (general & limited) 3. corporation (C & S corps) 4. limited liability companies & limited liability partnerships

How is property held in a partnerhsip?

1. tenants in partnership 2. individual partners

Who is in a corporation?

1. the owner 2. the board 3. the managers

How is a partnership formed in Georiga?

1. you first choose a name - if you are using you & your partner's last names, no paperwork is needed. if you are using something else, you must then file your trade name with the clerk of the superior court in the county in which you plan to do business 2. Draft a partnership agreement that outlines the various responsibilities and liabilities between partners 3. complete any filings to become an LLC, including any business licenses required by your industry's regulatory board or the Georgia Secretary of State Licensing Board 4. its advised to get an EIN (employee ID number) number from the IRS

What is one advantage of an LLC over a C corp? a. LLCs can have as many shareholders as they want; c corps are limited to 100 b. LLCs are not subject to double taxation; C corps are c. LLCs offer more legal protection than C corps d. LLCs can issue different classes of stock; c corps cant

Correct answer: b a: S corps have a limit of 100 shareholders c. C corps act as their own entity (esentially an individual person), so the liability under a corp is less d. C corts can issue different classes of stock; LLCs cannot

What kind of business is this? -this business has one general partner and three limited partners. -It is a pass-through business for tax purposes. -The general partner is not shielded from personal liability, but the limited partners are.

Limited partnership *unlike a c corp, it has pass-through taxation. and unlike the LLP, the general partner has no personal liability protection

in a partnership with an individual partners property, can either partner convey their share of the property whenever they want?

No - in a partnership entity, they must get approval of all partnership members.

what is a common reason a general partnership is created?

because the real estate investment requires more tie, talent, or resources than one person can provide on their own. General partners are often the "hands on" partner, actively managing the day to day.