GBL395Exam3Topics - General Exam Topics Exam 3 Business...

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General Exam Topics – Exam 3 Business Associations Sole Proprietorships someone who engages in business alone, and has not taken any steps in engaging in the business in a formalized manner engaged in business INDIVIDUALLY, do not take steps to formalize business (no need to incorporate/ partner up) when you’re involved in business enterprise without taking steps to formalizing it (Ex: Lemonade stand) no legal separation between business and person Upside don’t share profits WITH anyone else complete and total control of business NO start up costs NO recording needed Downside sole owner are responsible for ALL losses and liabilities if you build a product, the product is proven to be negligently made, you are liable most popular way to formalize business is to incorporate it NO established business entity different from individual engaging in business Advantage NO barriers to entry don’t have to answer to NO ONE reaps ALL the profits and benefits Disadvantage stands to suffer complete loss responsible for ALL liabilities UNLIMITED PERSONAL LIABILITY Partnerships When two or more people start a joint enterprise (where there IS a PURPOSE) between legal entities, they are considered partners as long as they DO NOT form any other business enterprise such as a corporation, LLC, etc. doesn’t normally happen by design deemed partners by default All parties share in terms of liabilities and dividing up profits almost like a sole proprietorship, but with two or more people, each can be fully liable unless its a limited liability company when you have separate entities coming together for a COMMON PURPOSE,and WORKING CONNECTED TO EACH OTHER partners share in profits EQUALLY or divided by the % they hold in the partnership Can be involved in several partnerships at same time
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Just like partnership owners receive a schedule K-1 to help prepare tax returns Partner in business dies, then that business partnership is over Downside Individuals can be responsible for all debts of the partnership Ex: those engaged in enterprise, everyone is completely liable for the entire debt (collectively and individually) of individual Joint & Several liability exist with every partnership Imposed by courts to hold someone liable Can be in partnership even if they don’t want to be in one Publicly Traded Corporations (PC)- Companies that's public traded on the stock exchange. Individuals or companies buy shares of the company which makes them owners. Private (close) Corporations cooperation that is not public traded on the stock exchange. Corporations:
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This note was uploaded on 11/14/2011 for the course GBL 395 taught by Professor Lashbrooke during the Spring '08 term at Michigan State University.

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GBL395Exam3Topics - General Exam Topics Exam 3 Business...

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