Chapter 4: Ownership

These flashcards cover key vocabulary and definitions related to the different forms of business ownership and organizational structures.

Sole Proprietorship

one individual, typically the easiest way to conduct business.

Partnership

A business structure where two or more individuals co-own a business, sharing profits and responsibilities.

Corporation

A legal entity that is separate from its owners, allowing for ownership through shareholders and providing limited liability.

S Corporation

A type of corporation that avoids double taxation by allowing income to pass through to shareholders' personal tax returns.

Limited Liability Company (LLC)

A business structure that combines the liability protection of a corporation with the tax benefits of a partnership.

Joint Venture

partners share a leader while maintaining identity.

Acquisition

acquiring another company through the purchase of its assets or shares.

Merger

The process of combining two companies into one legal entity, often to improve efficiency or competitive advantage.

Double Taxation

The taxation of corporate profits at both the corporate level and again as personal income when distributed to shareholders.

Limited Liability

A legal structure that protects owners' assets from being used to settle business debts.

What are the types of mergers?

The main types of mergers include horizontal mergers, vertical mergers, and conglomerate mergers.

What is a horizontal merger?

occurs between companies that operate in the same industry and are direct competitors.

What is a vertical merger?

companies in the same supply chain, where one company produces a part or component that is used by another company.

What is a conglomerate merger?

companies that operate in completely different industries, allowing the merged entity to diversify its product offerings.