Class 7 Law

Class 7 Law - BADM 242 Venture Management University of...

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BADM 242 – Venture Management University of Connecticut School of Business I. Forms of Business Organizations 1. Sole Proprietorship 2. Partnership a) General b) Limited 3. Limited liability organization (LLC) 4. Corporation a) S-Corporations b) C-Corporations B. Sole Proprietorship 1. Owned and operated by one person who invest a proportion of his or her personal assets? 2. It is not a legal entity separate and distinct from its proprietor. 3. The owner owns all the assets and assumes all liabilities of the business. 4. The owners personal and business assets are subject to claims of the creditors and the sole proprietorship ceases to exist at the death of its owner. 5. Reporting of taxes of the business is done on the owners individual income tax personal state end federal tax form. 6. Schedule “C” is the attachment to the individual return that outlines the income and operating expenses of the business. C. General partnership 1. Each partner contributes money and/or time with the expectation of sharing in the profits and losses of the business. 2. Each partner is an agent of the business, making his or her actions binding upon it. 3. Formal partnership agreements are not required by law; however, most partners create one to define the individual rights and obligations. a) In lieu of such a partnership agreement, state laws govern the terms of the partnership. 4. Partnerships may own real property and may also sue and be sued in the partnership name. 5. The partners are subject to unlimited personal liability 6. The partnership ceases to exist upon any changes in the association off the individual partners. 7. Income is taxed at the individual tax rate at the federal level. 8. Connecticut does not tax the partnership but does collect taxes from the partners on income earned by the partnership D. Limited partnership 1. Designed to attract investors 2. Includes a general partner and one or more limited partners 3. The limited partners are passive participants. a) They invest capital into the partnership, but do not take part January 18, 2007 Page 1 of 12 G:\Rich Cheney's My Documents 07\Cheney\Cheney Personal\Teach\UCT\BADM 242 Spr 07\HO\Class 9 Bank.doc
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in daily operations. 4. The general partner has unlimited liability for partnership acts, while a limited partner's liability is limited to the amount of his or her investment in the partnership. E. C-corporation 1. State-charted organization which acts as a separate legal entity 2. Owned by one or more shareholders whose loses will be limited to the amount of their respective investments. 3. Shareholders are not generally held liable for the entity’s debts or liabilities unless they have personally guaranteed them. 4.
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This note was uploaded on 04/17/2008 for the course BADM 242 taught by Professor Richardcheney during the Fall '07 term at UConn.

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Class 7 Law - BADM 242 Venture Management University of...

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