chapter 11 Flashcards
What is sole proprietorship
individual running business
Individuals taxed at their personal income tax rate
Personally liable for all debts, losses and obligations beyond the assets held in business
Partnership
two or more person contributing to the business
Legislated under the partnership Act
General Partnership
Are active in the daily operations and are personally liable for all debts of the business
Limited Partnership
Limited partner cannot participate in daily operation and their liability is limited to their investment
Corporation
Distinct and separate legal entity from shareholders
Shareholder have no liability for the debts of the corporation
able to raise funds by issuing equity or debt
Advantages of Incorporation
Limited liability
Continuity of existence
transfer of ownership
Can raise funds more faster
Can handle large amount of capital
Managed professionally
Disadvantage of Incorporation
Loss of flexibility
Taxation - Double taxation
Expense -due to regulations
Capital withdrawal
What a must company do before incorporating
file documents
Pay required fees
Corporation must include what to their names
limited, corporation,
incorporated
Characteristic of a Private Corporation
Limited number of shareholder (not more than 50)
Restriction in members of public to hold shares
Characteristic of Public Company
Company that’s listed and traded on public stock exchange or OTC
what are special meeting
held to address matter requiring attention prior to next annual shareholder meetings
What is voting by proxy?
power of attorney given by a shareholder to vote on their behalf
What happens when proxy is unmarked
automatically cast with management’s viewpoint
What is voting trusts
when a corporation is undergoing restructuring and is placed under control of a few individuals
