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Forms of Business Organization
- **3 basic forms include
- Sole proprietorships
- **4 hybrid forms
- Limited partnerships
- S corporations
- Limited liability companies
- Limited liability partnerships
Factors to consider when selecting a businesses organizational form
- The cost of creating the organization
- The continuity or stability of the organization
- The control of decisions
- The personal liability of the owners
- The taxation of the organization's earning ad its distribution of profits to the owners
- The stability or durability of the organization
- Also if the partnership is dissolved at any time there is a change in the partners.
Any change in the ownership of the organization that changes the legal existence of the organization.
The easiest and least expensive business organization to create. Sole liability, all responsibility.
All partners in a general partnership have unlimited liability for their organization's debts. The partners personal assets, which are not associated with the partnership, may be claimed by the partnership's creditors. Creditor can sue 1, 2, 3, ect to collect.
Shareholder obligations limited to investment, absent other commitments.
An agreement between two or more persons to share a common interest in a commercial endeavor and to share profits and losses.
- Two or more persons
- A common interest in business
- Sharing profits and losses
Employees receive a salary
Involves the winding up or liquidating of a business; dissolution simply means the legal form of organization no longer exists.
An artificial, intangible entity created under the authority of the state's law.
In the state in which it is incorporated
In other states than which it is incorporated
In another country other than where it is incorporated.
- Shareholders- hold shares of the corporation
- Directors- set the objectives or goals of the corporation, and appoint the officers
- Officers- president, vice president, secretary, and treasurer, manage daily operations of the corporation
Is an agent appointed by a shareholder for the purpose of voting the shares.
A lawsuit may be brought by minority shareholder on behalf of the corporation.
Piercing the corporate veil
Courts disregard the existence of a corporation
Is not personally liable, and have no control
Owners are liable to the debt of the corporation up the amount of your initial investment.
Personally liable for the organization's debts.
Double taxation, the corporation is taxed on its profits, and the partners are also taxed on their shares or the profits.
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