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Understanding Bus5
Chapter 5
| Question | Answer |
|---|---|
| Owned and managed by one person | Sole proprietorship |
| Two or more people legally agree to co-own a business | partnership |
| A legal entity with authority to act and have liability apart from its owners | corporation |
| Ease to start and end a business ability to become your own boss pride of ownership tax advantages retention of company profit | advantages of sole proprietorships |
| the responsibility of owners for all of the debts of the business- the risk | unlimited liability |
| unlimited liability limited financial resources overwhelming time commitment limited growth limited life span | disadvantages of sole proprietorships |
| A partnership in which all owners share in operating the business and in assuming liability for business's debts | general partnership |
| a partnership with one or more general partners and one or more limited partners | limited partnership |
| an owner who has unlimited liability and is active in managing the firm | general partner |
| an owner who invests money in the business but does not have any management responsibility or liability for losses beyond their investment | limited partner |
| the responsibility of a business's owners for losses only up to the amount they invest; limited partners and shareholders | limited liability |
| a partnership that looks like a corporation but is taxed like a partnership | master limited partnership MLP |
| a partnership that limits partners' risk of losing their personal assets to only their own acts and omissions and to the acts and omissions of people under their supervision | Limited liability partnership LLP |
| more financial resources shared management more skills and knowledge longer survival tax advantages | advantages of a partnership |
| unlimited liability division of profits disagreements among partners difficulty of termination | disadvantages of a partnership |
| a star charged legal entity with authority to act and have liability separate from its owners | Conventional (C) corporation |
| A unique government creation that looks like a corporation but is taxed like a sole proprietorship or partnership, must meet qualifications | S corporation |
| must have under 100 shareholders must be citizens or residents of the US must have one class of stock no more than 25% of income from passive sources | qualifications of S corporations |
| similar to S corporations but without requirements | limited liability companies (LLC) |
| Limited Liability ability to raise money perpetual life ease of ownership change separation of ownership from management | advantages of corporations |
| initial cost double taxations two tax returns size may become to large to manage difficulty terminating | disadvantages of corporations |
| The result of two firms joining to form one company | merger |
| the joining of two companies involved in different stages of related businesses | vertical merger |
| the joining of two firms in the same industry | horizontal merger |
| the joining of firms in completely unrelated industries | conglomerate merger |
| one company purchases the property and obligations of another company | acquisitions |
| an attempt by employees, management, or a group of investors to buy out the stockholders in a company by borrowing the necessary funds | leveraged buyout (LBO) |
| an arrangement whereby someone with a good idea for a business sells the rights to use the business's name and sell a product or service to others in a given industry | franchise agreement |
| One who sells their idea/product/service | franchisor |
| selling the name or product or service | franchise |
| One who buys an idea /product/service | franchisee |
| management and marketing assistance personal ownership nationally recognized name financial advice and assistance lower failure rates | advantages of a franchise |
| large start up costs shared profit management regulation coattail effects restrictions on selling fraudulent franchisors | disadvantages of franchises |
| a business owned and controlled by the people who use it- producers, consumers, or workers with similar needs who pool their resources for mutual gain | cooperatives |
Created by:
kellyderbes
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