Business Entities Overview

Questions and Answers

What are limited partnerships?

Businesses where all partners have equal standing

Businesses where general partners are fully responsible for debts (correct)

Businesses with no liability for limited partners (correct)

Businesses where partners are equal

What is a joint venture?

A temporary partnership set up for a specific purpose.

What is a corporation?

A type of business organization owned by many people, treated as a person by law.

Why form a corporation?

To need financial capital and wanting financial backers. Signup and view all the answers

What is a major disadvantage of corporations?

Heavily taxed compared to other businesses Signup and view all the answers

Match the following aspects of corporate structure:

Register the Corporation = File the articles of corporation with basic info. Sell Stock = Offering ownership shares in the company. Elect Board of Directors = Choosing a supervising and controlling body for the corporation. Signup and view all the answers

What is required to register the corporation?

File the articles of incorporation with basic information. Signup and view all the answers

What are common characteristics of common stock?

Part ownership of the corporation Signup and view all the answers

What is a franchise?

A contract selling rights to use a business's name and sell its products. Signup and view all the answers

Study Notes

Limited Partnerships

Limited partnerships consist of unequal partners: general and limited.
General partners are fully liable for the company's debts.
Limited partners contribute financially but their liability is limited to their initial investment.

Joint Ventures

Joint ventures are temporary partnerships formed for a specific project.
These partnerships dissolve once their purpose is achieved.

What Is A Corporation?

A corporation is a business entity owned by multiple individuals, legally recognized as a separate entity.
It has the ability to own property, enter contracts, sue, and be sued.

Why Form A Corporation?

Corporations are formed to secure financial capital and attract investors without requiring them to manage the business.

Advantages & Disadvantages

Corporations exist separately from their stockholders, offering distinct ownership rights.
Stock represents ownership and entitles shareholders to a share of profits and assets.
Stockholders enjoy limited liability, protecting personal assets from business debts, but this comes with higher taxation compared to other business types.

Corporate Structure

To establish a corporation, one must register it in the state of operation.
Corporations need to sell stock to raise funds.
It's necessary to elect a board of directors to oversee the corporation.

Register The Corporation

Registration requires filing articles of incorporation detailing the company’s name, address, purpose, board members, shares to be issued, and fundraising goals.

Selling Stock

Common stock provides partial ownership and a share in profits through dividends.
Preferred stockholders do not have voting rights but receive guaranteed dividends and priority over common stockholders for assets upon liquidation.

Board Of Directors

A board of directors is essential for incorporation, tasked with supervising corporate operations.
Bylaws outline rules for selling stock and governing the corporation.

Franchises

A franchise is a contractual agreement allowing one business (franchiser) to sell another's (franchisee) goods under its name.

Description

Explore the fundamental concepts of limited partnerships, joint ventures, and corporations. This quiz covers the structure, advantages, and liabilities associated with different business entities. Understand the critical differences that define how these entities operate and affect ownership rights.