A share of stock is an apportioned ownership interest

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A “share” of stock is an apportioned ownership interest in the corporation, and the value of a single share can range from less than 1% interest in the corporation to 100 % (Yes, 2
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Secretary. takes the initial step of incorporating the business (the promoter). Once the corporation is up and running, the directors are elected by the shareholders at the annual meeting. a single person can own sole ownership of a corporation in which she is incorporating. Remember, a corporation must follow certain procedure in the state where it is incorporating. Failing to follow the procedure, you may not have a legal corporation. A key to being a corporation is to limit the personal liability of the owners (i.e., shareholders) from liability either for a tortious, contractual or criminal liability/lawsuit. De Facto 1. Promoter has made a good faith effort to incorporate and has actually used the corporation to conduct business De Jure 1. Promoter has complied with requirements for incorporation but minor error Estoppel 1. S CORPORATIONS Shareholders of S Corps have the best of all worlds Limited liability of corporation Tax status of a partnerships Disadvantages 1. One class of stocks 2. No more than 100 shareholders 3. Shareholders must be us citizen or residents 4. All shareholders must agree that the company should be an S corporation 3
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CLOSE CORPORATIONS Corporation whose stock is not publicly traded on a stock exchange Common provisions of close corporations Protection of minority shareholders Transfer restrictions Flexibility Dispute resolution LIMITED LIABILITY CORPORATIONS 1. A LLC offers limited liability of a corporation and tax status of a partnership, without the disadvantages of S corps 2. Members risk only their investments 3. Biggest disadvantage is legal uncertainty involved since it is new type of business . We have discussed sole proprietorships and corporations. We now turn our attention to General Partnerships. Saddle up partners. Yes, partnerships are like a good, ole country western song; they deal with the heartache of love and marriage. Partnerships are like a marriage. There can be great times and, hopefully, they will last. However, sometimes they can end like a divorce and be very, very nasty in dividing up the assets. There several key advantages of Corporations to that of Partnerships: Corporations ownership , through shares of stock are easily transferable to another person; Corporations have perpetual existence; and it is easier to raise funds. Partnerships have two important advantages. One, they do NOT pay taxes; and two, they are easy to form, unlike corporations. Typically, you are required to file partnership papers in the your local Circuit Court Clerk’s Office. Partnerships are grounded in our old friend Common Law. However, like the UCC, to be more consistent throughout all the states, the UPA, the Uniform Partnership Act was passed. Although the UPA has made life a lot easier, common law still plays an important role in regulating partnerships.
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  • Fall '14
  • JosiahShowalter
  • Corporation, Types of business entity, partner, partnership agreement, tax status of a partnership

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