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Flashcards in Business Operations Deck (58)
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1

What are the 5 types of business organizations?

1. Sole proprietorship
2. General or limited partnership
3. Corporation
4. Limited liability corporation or limited liability partnership
5. Joint venture

2

Sole propietorship

-owned by individual; company can operate under owner's name or company name

3

Advantages of a sole proprietorship

-easy to set up
-total mgmt control by owner
- tax benefits expenses/losses can be deducted from company's gross income

4

Disadvantages of a sole proprietorship

-owner totally liable for company's debts/ losses - owner's personal property and assets can be seized to pay for judgements if company gets sued
- raising capital and credit depends on the owner’s own personal credit rating and assets
- difficult to sell

5

General partnership

Two or more people share in management, profits, and risks. Income shared among partners, reported on personal taxes. Each partner is personally liable for business debts liabilities

6

Limited partnership

Sim. To general partnership. Has at least 1 general and 1 limited partner. Limited partners are investors who receive portion of profits but have no say in management of company. Limited partners are only liable to the extent of their investment

7

Advantages of general or limited partnerships

1. easy to form
2. Each partner brings particular talent

8

Disadvantages to a general or limited partnership

-All partners liable
- income taxed at individual rates

9

Corporation

Association of individuals that exists as a legal entity apart from its members. To form, formal articles of incorporation must be drawn up by attorney and filed with state office. Financially and legally independent from shareholders

10

Two types of corporations

C corporation and S corporation

11

Hierarchy of a corporation

Shareholders

Directors

Officers

12

Shareholders

Owners of corp. In proportion to the # of shares they own -elect directors

13

Directors

Act in best interest of shareholders. Responsible for broad policy decisions

14

Officers

Elected by directors. Carry out day-to-day management

15

Advantages of corporation

1. Shareholders only liable for amount of their investment
2. Personal assets not at risk
3. Easy to raise capital thru sales of stock
4. Taxed at lower rates than individ.

16

Disadvantages of a corporation

1. Corporation and shareholders taxed separately (effectively twice)
2. Initial cost to setup and to maintain

17

S corporation

Usually less than 100 people. Allocate income and losses directly to shareholders in proportion to holdings.taxed @ individual rates

18

Advantages to S corporation

-Same as C corporation
-Avoids tax on corporate income

19

Disadvantage to S corporation

-size restrictions
- must be domestic

20

Who's liable in a professional corporation?

- The person responsible

21

Joint venture

Temp, association of two or more people/firms to complete specific project /goal. Usually formed when project is too large for one firm. Dissolved when project is complete.

22

Teaming agreement

Developed before joint venture. Outlines roles, resp., and contractual relationships that will be established if the proj. Is awarded

23

In a joint venture, what do taxes depend on?

State law

24

Limited liability corporation and limited liability partnership

Combine advantages of partnership /sole proprietorship with limited liability of a corporation. Formed like a partnership but possible for non -member to be manager

25

Advantages of LLC/LLP

1. Liability limited to a person's investment
2. Easier to set up than corporation

26

Disadvantage to LLC / LLP

1. Business not taxed
2. Profits / losses passed thru to each member which must be reported on personal Fed. Tax return
3. Must pay self-employment tax for ss and Medicare

27

Standard of care

Legal concept, level of skill and diligence that a reasonably prudent architect would exercise in same community, time frame, given same facts and circumstances

28

What is AIA doc 201?

General conditions of the contract for construction. Outlines what contractor should do when he/she comes across hazardous or unknown circumstances during construction.

29

What must happen when a contractor finds hazardous materials or substances as outlined in AIA Doc 201?

1. Work must stop immediately
2. He must notify architect and owner
3. Owner must find entity to verify test material/substance and provide list of entities to architect and contractor
4. Architect and/or contractor must respond in writing it any objections
5. Once material is rendered harmless, contract sum and time are increased by change order

30

What must happen when a contractor finds an unknown condition as outlined by AIA Doc 201?

1. Must notify architect and owner before condition is disturbed and no later than 14 days after observing
- if contract other than AIA Docs are used the contractor can just notify the architect
2. Architect should notify owner
3. Architect should investigate to see if conditions will increase or decrease contractor's time req.
4. May need to request a consultant