Chapter 6 - Intro to Busi

Sole Proprietorship

A form of business ownership with a single owner who usually actively manages the company

Unlimited Liability

when a businesses formed as a sole proprietorships or business partnerships cannot pay their bills, the businesses assets can be seized to pay debts

General Partnership

a partnership in which all partners can take an active role in managing the business and have unlimited liability for the any claims against the firm

Partnership

a voluntary agreement under which two or more people act as co-owners of a business for profit

articles of incorporation

document filed with a state government to establish the existence of a new corporation

Corporation

a form of business ownership in which the business is a considered a legal entity that is separate and distinct from its owners

Limited Liability company (LLC)

a form of business ownership that offers both limited liability to its owners and flexible tax treatment

Limited Liability

when owners are not personally liable for claims against their firm, may lose their investment in the company, but their other personal assets are protected

Limited Liability Partnership (LLP)

a form of partnership in which all partners have the right to participate in management and have limited company debts

Limited Partnership

a partnership that includes at least one general partner who actively manages the company and accepts unlimited liability and on limited partner who gives up the right to actively manage the company in exchange for limited liability

C- Corporation

a legal business entity that offers limited liabilty to all of its owners, who are called stockholders

Corporate Bylaws

the basic rules governing how a corporation is organized and how it conducts its business

Institutional Investors

An organization that pools contributions from clients, or depositors and uses these funds to buy stocks and other securities

Stockholders

An owner of a corporation

Board of Directors

The individuals who are elected by stockholders of a corporation to represent their interests

Statutory close corporations

a limited number of owners that operates under simpler, less formal rules than a C corporation

S corporations

a form of corporation that avoids double taxation by having its income taxed as if it were a partnership

Acquisition

a corporate restructuring in which one firms buys another

merger

a corporate restructuring that occurs when two formerly independent business entities combine to form a new organization

Divestiture

The transfer of total or partial ownership of some of a firms operations to investors or to another company

non profit corporations

a corporation that does not seek to earn a profit and differs in several fundamental respects from C corporations

Franchise

trademark, products, business methods, and other property in exchange for monetary payments and other considerations

Franchisor

relationship that allows others to operate its business using resources it supplies in exchange for money and other considerations

Franchisee

the party in a franchise relationship that pays for the right use resources supplied by the franchisor

Distributorships

a type of franchising arrangement in which the franchisor makes a product licenses the franchisee to sell it

Business format franchises

a board franchise agreement on which the franchisee pays for the right to use the name, trademark, and business, and production methods of the franchisor

Franchise Disclosure Document (FDID)

A franchisor must provide a full description of the franchise to the franchisee at least 14 days before signing the agreement. This includes all key details about the franchise.

Franchise Agreement

The contractual arrangement between a franchisor and franchisee that spells out the duties and responsibilities of both parties

Stockholder

an owner of a corporation

institutional investor

an organization that pools contributions from investors, clients, or depositors and uses these funds to buy stocks and other securities

S Corporation

A form of corporation that avoids double taxation by having its income taxed as if it were partnership

Satutory Close corporation

limited number of owners that operate under simpler, less formal rules than a c corp

Horizontal Merger

A combination of two firms that are in the same industry

Vertical Merger

a combination of firms at different stages in the production of good or service

Non profit corporation

does not seek to earn a profit and differs in several fundamental respects from C Corp

Conglomerate merger

a combination of two fims that are in unrelated industries

Distributorship

a type of franchising arrangement in which the franchisor makes a product and licenses the franchisee to sell it

business format franchise

agreement in which the franchisee pays for the right to use the name, trademark, and business, and production methods of the franchisor