Business Organizations Overview

Vocabulary flashcards covering the definitions, ownership structures, taxations, and liabilities of business organizations based on Exhibit F:1-4.

Sole Proprietorship

A business with a single owner (called the proprietor) that terminates at the owner's choice or death, where the owner is personally liable for debts and pays tax on the proprietorship's earnings.

Proprietor

The single owner of a sole proprietorship.

Partnership

A business with two or more owners (called partners) and not organized as a corporation, which terminates at a partner's choice or death and is commonly used by professional organizations of physicians, attorneys, and accountants.

Partner

An owner of a partnership who is personally liable for the business's debts and pays tax on their share of the earnings.

Corporation

A business organized under state law that is a separate legal entity, has an indefinite life, is a separate taxable entity, and can range from small business to large multinational business.

Stockholder

An owner of a corporation who is not personally liable for the business's debts.

Limited-Liability Company (LLC)

A company in which each member is only liable for their own actions, serving as an alternative to the partnership with an indefinite life and members who are not personally liable.

Member

An owner (also called a partner) of a Limited-Liability Company (LLC) who is not personally liable for the business's debts and pays tax on their share of earnings.