Chapter 2 - Business Structure

Question 1

Limited Partnership

Answer 1

a partnership with at least one general partner and one limited partner. Limited partners give up certain general mgmt rights that partners in a general partnership have in exchange for limited liability. A limited partnership must have at least one general partner that will be generally liable for the firms obligation.

Question 2

Limited Liability Limited Partnership

Answer 2

Allows general partners to enjoy limited liability just like limited partners. Both GPs and LPs will remain liable for the consequences of torts that they personally commit while carrying out partnership business

Question 3

Corporation

Answer 3

An artificial legal entity whose owners typically enjoy limited liability. Double taxation

Question 4

S Corporation

Answer 4

-No more than 100 SHs
-Unianimous election
-All shareholders must be individuals estates or certain exempt organizations or trusts
-Only one class of stock
No double taxation
The shareholders report the corporation’s income on their tax returns even if the income is not distributed to them.
The shareholders generally report the corporation’s loss on their tax returns.

Question 5

LLC

Answer 5

Allows business owners to gain the liability-limiting advantages of the corporate form while enjoying the single, pass-through tax benefits of the partnership form of business. In the typical limited liability company (LLC), unlike the common corporation, the interests of the members are not freely transferable. The other members have to agree to admit new members.

Question 6

Joint venture

Answer 6

a one-shot general partnership.

Question 7

General Partnership

Answer 7

an association of 2 or more persons to carry on as co-owners of a business for profit

Question 8

Limited Liability Partnership (LLP)

Answer 8

• a partnership that protects partners from liability for other partner’s torts
• has fewer requirements to qualify for pass-through taxation than do Subchapter S corps
• may have more than 100 SH, but limited to professionals
• must purchase a minimum amount of liability insurance in order for limited liability to be granted to its partners

Question 9

Piercing the corporate veil

Answer 9

If a court pierces a company’s corporate veil, the owners, shareholders, or members of a corporation or LLC can be held personally liable for corporate debts. This means creditors can go after the owners’ home, bank account, investments, and other assets to satisfy the corporate debt.

Question 10

Partnerships general def

Answer 10

involves two or more persons to carry on a business as co-owners for a profit. Partnerships do not include nonprofit associations such as charitable organizations, labor unions or clubs.

Question 11

What must articles of incorporations include?

Answer 11

• Name and address of office
• # of authorized shares
• name and address of incorporators
• name of registered agent at office

Question 12

Promoters

Answer 12

one who forms a corporation with the goal of the corporation eventually coming into existence.