Module 3

C-Corporation

A legal entity owned by stockholders, characterized by double taxation, no personal liability for stockholders, and multiple classes of stock.

S-Corporation

A legal entity with 1 to 100 stockholders, limited to US citizens/residents, having pass-through taxation and only one class of common stock.

Limited Liability Company (LLC)

A legal entity without ownership restrictions, offering limited liability for members and taxed at the member level.

Limited Partnership (LP)

A partnership consisting of general partners with full liability and limited partners with limited liability, taxed at the partner level.

Corporate Compliance

The adherence to corporate formalities to limit personal liability, including appointing officers and keeping minutes.

Intellectual Property (IP)

Legal rights concerning inventions, designs, and brands, protected through licenses and agreements.

Debt Capital

Funds provided with a promise of repayment, which may be secured or unsecured.

Equity Capital

Investment where investors receive ownership interest in exchange for funding, often increasing their involvement.

Crowdfunding

Capital raising method involving multiple investors through donation, investment, or loan, requiring visibility for success.

Pre-Money Valuation

The company’s equity worth before receiving funding.

Post-Money Valuation

The company’s equity worth after receiving funding.

Weighted Average Cost of Capital (WACC)

A calculation that reflects the average rate of return expected by all of a company's stakeholders.

Cost of Debt

The effective rate that a company pays on its borrowed funds, calculated after considering the tax effect.

Cost of Equity

The return a company requires to decide if an investment meets capital return requirements, often calculated using CAPM.

CAPM (Capital Asset Pricing Model)

A model used to determine the expected return on an asset, considering its risk relative to the market.

Franchising Basics

The relationship between franchisor and franchisee, including the obligations and benefits of both parties.

Industry Licensing

Permissions required to operate in regulated industries, ensuring compliance with various regulations.

Employee Issues

Governance related to equity, voting rights, and ownership distribution among employees.

Proper Contracts

Agreements that outline terms and conditions in business dealings to safeguard against breaches, such as NDAs and vendor agreements.