BL2413 Final

What will an entrepreneur consider when crafting an organization

ease of creation

What business forms do entrepreneurs use

sole proprietorship

Requirements for all business forms

Business name registration

Trademarks

registered with the US Patent and Trademark Office (PTO)

Trade secrets

many lie about product development

Obtaining loans

allows the owner to retain full ownership and control of the business

Franchises

the right to operate a business or to sell a product

Franchisee

a person who buys a franchise

Franchisor

seller of the franchise

3 types of franchises

1. Distributorship 2. Chain-style business operation 3. Manufacturing or processing arrangement

Distributorship

franchisor licenses franchisee to sell franchisor's product in a specific area

Chain-style business operation

type of franchise where the franchise operates under franchisor's business name and follows franchisor's standards/methods

Manufacturing arrangement

franchisor provides franchisee with technical knowledge to manufacture franchisor's product

Franchise rule

franchisor must disclose certain information to prospective franchisees

Payment for franchise

franchisee usually pays an initial fee or lump-sum price for the franchise license

Business premises

franchise agreement determines: leased or purchased

Uniform Partnership Act (UPA)

uniform law adopted in 49 states governing general partnerships' creation

Elements of a Partnership

1. Sharing profits/losses 2. Joint ownership 3. Equal right to manage

The court will presume a partnership exists if

debt installments

Joint property ownership

does not create a partnership

Aggregate

gather

accumulate

Entity

anything having existence

Pass-through entity

a business entity that has no tax liability

Information return

reports business income or losses

Articles of partnership

written agreement detailing partners’ rights and obligations

Partnership by Estoppel

court-imposed partnership when nonpartners appear as partners and others rely on it detrimentally

Charging order

order allowing a creditor to collect a partner's profits

Indemnification

partner who commits a tort must reimburse the partnership for any damages it pays

Dissolution

breaking up

termination of legal bond or contract

Winding up

second stage of partnership/corporation termination: assets collected

Limited Liability Partnership (LLP)

partnership limiting partners' risk to their own acts and acts under their supervision

Formation of an LLP

must comply with state statutes

Family Limited Liability Partnership (FLLP)

partners are related to each other

General partnership

UPA governs it

Limited partnership

RULPA governs it

Certificate of limited partnership

document filed with a state official to form a limited partnership

Limited Liability Limited Partnership (LLLP)

limited partnership where general partners have the same limited liability as limited partners

Members

owners in a LLC

Articles of organization

document filed with the state to form a limited liability company (LLC)

Syndicate

group of intermediaries managing stock/bond issuance

Dividends

distribution of corporate profits to shareholders

Holding company

firm buying stocks and bonds of smaller companies

3 types of corporations

1. Domestic 2. Foreign 3. Alien

Domestic corporation

organized under the law of that state

Foreign corporation

does business in one state but is incorporated in another

Alien corporation

formed in another country but does business in the US

Public corporation

stock can be bought

Publicly held corporation

corporation selling stocks on the open market

Close corporation

corporation not offering shares for public sale

S corporation

has attributes of a corporation but with special tax status

Incorporation procedures

1. Select a state 2. Secure a name 3. Prepare articles of incorporation 4. File with Secretary of State

Express powers by priority

1. US Constitution 2. State Constitutions 3. State statutes 4. Articles of Incorporation 5. Bylaws 6. Board resolutions

Piercing the company veil

court holds LLC members personally liable for debts

Stocks

shares of ownership in a company

Bonds

debt securities

Crowdfunding

networking/pooling funds via internet for corporate activities