Limited liability corporations a limited liability

This preview shows page 9 - 12 out of 25 pages.

Limited Liability Corporations A limited liability company is a business that is treated like a corporation for liabilitypurposes but like a partnership for federal tax purposes oCorporations are taxed double – corporate level and personal level Formed by two or more membersMembers have a membership interest in the company – similar to being a limited partnerUnlike a corporation, an LLC is technically not allowed perpetual life
Death, bankruptcy, retirement, resignation, or expulsion of any member terminates the membership of a member but the LLC can continue if all remaining members give their consent
Organizational FeaturesLimited liabilityoAllows people to invest in a business without placing their personal wealth atrisk oAllows investors to be passive toward the internal management of businessoPierce the corporate veil – hold the owners personally liable under some circumstancesTransferability of Ownership InterestsoThe ability of an owner in a business venture to sell or pass that interest to othersDurationoBusiness’s ability to continue to operate in the event of the death, retirement, or other incapacity of an owner of the business oA corporation has the potential of perpetual existence FranchisesExists when a franchisee is granted the right to sell goods or services by a franchisor according to a marketing planSuccessful franchises have two things in common: a trademark that conveys authenticity and exclusivity and a uniform product or service Types of franchisesoProduct distributorships – car dealership selling cars for parent companyoTrademark or trade name licensing – market company’s brandoBusiness format franchising – follows business model set out by parent company, ie mcdonaldsThe Franchise AgreementSets forth the rights and obligations of the franchisor and franchiseeGrants the franchisee the right to use the franchisor’s name and identifying trademarks and trade dressFranchisee probably has to go thru trainingSets out where they can set up franchise – can’t be too close to another one Lists franchise fee and royalties to be paidCan terminate for many reasons: expiration, franchisee does something wrong and doesn’t fix it etcChapter 13 Negotiable InstrumentsA negotiable instrument is a written promise or order to pay a certain sum of money
oFunctions as a substitute for cash A negotiable instrument can be transferred to another party once issuedIf an instrument is made to bearer the party in possession is required only to deliver the instrument to transfer itoTo the order or bearer = to cashRequirements for Negotiable InstrumentsTo be negotiable, an instrument must:oBe writtenoBe an unconditional order or promise to payoBe signed by the maker or draweroBe payable on demand or at specified timeoBe made out to order or to bearer oState a certain sum of moneyA negotiable instrument may be transferred in two wayso

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture