87765-piy-ch11-01.pdf_119843 - CHAP TER Business...

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FIGURE 11.1 Apple’s Headquarters in Cupertino, California Source: Photo courtesy of kalleboo, http://www.flickr.com/ photos/kalleboo/3614939469/sizes/o. corporation A legal entity chartered by the state, with a separate and distinct existence from its owners. CHAPTER 11 Business Organizations LEARNING OBJECTIVES Businesses must be organized in order to effectively conduct their operations. This organization can run from simple to complex and depends greatly on the needs of the business owners to structure their liability and taxes. In this chapter, you’ll learn about the factors that go into organizing a business. Specifically, you should be able to answer the following questions: 1. What are the available entity choices when conducting business? 2. What are the factors that determine entity selection? 3. What are the traditional entity choices, and how are they different from each other? Many of you may be reading this chapter on a laptop or desktop designed and manufactured by Apple Inc. You may own a phone from Apple, or perhaps a portable music device. The company’s innovation, product development process, marketing capabilities in creating new and unthought-of markets, and ability to financially reward its owners are well known. While you might enjoy Apple products as a consumer, have you ever thought about Apple as a corporation ? Its corporate headquarters in Cupertino, California (Figure 11.1), is the physical embodiment of this entity we call a corporation, but what does that mean? It might surprise you to learn that this building, or rather the legal concept of the entity that occupies it, is more like you than you realize. For example, just like you, this entity can own property. This entity can enter into contracts to buy and sell goods. This entity can hire and fire employees. This entity can open bank accounts and engage in complex financial transactions. This entity can sue others, and can be sued in court. This entity even has constitutional rights, just like you. Unlike you, however, this entity does not breathe, does not bleed, and in fact may be immortal. And most unlike you, this entity has no independent judgment of its own, no moral compass or conscience to tell it the difference between right and wrong. In this chapter we’ll explore corporate entities such as Apple Inc. in detail. We’ll examine why human beings choose to organize into corporate entities in the first place, and why the law recognizes these entities for public policy purposes. We’ll start by looking at the factors that go into making a decision about entity choice, and then examine the available choices in detail. Personal PDF created exclusively for Wendy Ruan ([email protected])
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business Any commercial enterprise, usually organized for profit of its owners, and typically involving the provision of goods or services to a customer.
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87765-piy-ch11-01.pdf_119843 - CHAP TER Business...

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