Business Structures and Legal Organizations Chapter 8

A set of flashcards covering key terms and definitions related to business structures and legal organizations.

Sole proprietorship

The simplest form of business owned and run by one individual, with unlimited liability.

Unlimited liability

A potential disadvantage where the owner is personally responsible for all business debts.

General partnership

An association of two or more persons to carry on a business for profit, sharing profits and losses.

Limited partnership

A partnership that includes limited partners who have limited rights and responsibilities.

Limited liability

A condition where a partner is only liable for the amount they invested in the business.

Corporation

A legal entity created by state law with separate assets and liabilities from its owners.

Shareholder

An owner of shares in a corporation.

Dividend

A percentage of the profits distributed to shareholders.

Double taxation

The taxation of corporate profits twice, once at the corporate level and again as dividends.

C Corporation

A type of corporation that faces double taxation but provides limited liability to its owners and can raise capital through public investment.

S Corporation

A corporate structure allowing income to pass through to shareholders, taxed at personal income rates.

Limited Liability Company (LLC)

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

Merger

An agreement where two companies operate as a new company.

Acquisition

A process where one company purchases another company.

Conglomerate

Mergers or acquisitions of companies from different industries.

Franchise

An arrangement where a franchisor licenses a franchisee to operate a business using its trademark in exchange for payments.

Royalty

An ongoing fee based on the revenue earned by the franchise.

Franchise agreement

The terms and conditions associated with purchasing a franchise.

Negative halo effect

The risk that a different owner may harm the overall brand image.