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Business Formation

Terms in this set (14)

Sole Proprietorship
a business owned by one person whose personal wealth is at risk if the business fails
Merchandise Company
a business that obtains and distributes goods to customers
Service Firm
a business that exists to provide services to customers (clients)
Partnership
a business owned by two or more individuals whose personal wealth is at risk if the business fails.
Mutual Agency
each partner has the power to act for, and legally obligate, all other partners
Unlimited Liability
once the business's assets are exhausted, the personal assets of the owners can be used to satisfy liabilities of the business
partnership agreement
outlines the rights and obligations of each partner
double taxation
something corporations are subject to in which the profits earned by the corporation are taxed twice-once at the business level and again at the owner level if profits are distributed as dividends
S corporation
a small business corporation owned by no more than 100 individuals. Profits earned by the business are not taxed at the corporate level, instead the profits flow through to the owners and are taxed on the owners' personal tax return, regardless of when the profits are distributed.
C Corporation
The most common type of corporation, which is a legal business entity that offers limited liability to all of its owners, who are called stockholders
Limited Liability Partnership (LLP)
a partnership in which the individual partners are liable only for their own actions and the actions of those individuals under their control
Limited Liability Company (LLC)
eliminates the impact of the unlimited liability for all the owners, does not limit the number of owners, and does not limit participation in the management of the firm as limited partnerships do. Profits pass through to the owners before they are taxed.
Corporation
a business entity that is legally separate and distinct from its owners
Manufacturing Firm
A business organized to convert raw materials into finished goods
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