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Flashcards in Business Entity: Operation Deck (5)
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1

Business Entity
Operations
Sole Proprietorships

Sole Proprietorships
- owner makes all decisions or delegates

2

Business Entity
Operations
General Partnerships

General Partnerships
- absent any agreement, all partners have equal rights in management and conducting affairs
- absent any agreement, majority vote covers all decisions
- unanimity needed for anything contrary to agreement or that is extraordinary
- Admitting new partner
- Assigning partnership property
- Disposing of goodwill
- Any other act that would make business impossible

3

Business Entity
Operations
Limited Partnerships, LLP's, and LLLP's

Limited Partnerships, LLP's, and LLLP's
- one+ general partners make management decisions
- if limited partners leave sidelines, no longer limited liability

4

Business Entity
Operations
Corporations

- shareholders elect directors, directors elect officers, and officers make day-to-day decisions
- can be the same people
- Piercing the Corporate Veil
- small closely held corporations
- commingling funds is bad
- diversion of use of corporate assets
- failure to maintain formalities
- failure to adequately capitalize
- use as shell or conduit
- no separate corporate assets
- formation to assume existing liabilities of a person

5

Business Entity
Operations
Limited Liability Companies

Limited Liability Companies
- owner managed or manager managed
- set forth in operating agreement filed with state
- LLC law is not uniform throughout the states
- no prohibition against single person LLC

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