Forms of Business Ownership Flashcards

Vocabulary flashcards covering business ownership structures, corporate governance, and taxation concepts based on lecture notes.

Sole Proprietorship

A business owned by one person, taxed based on individual income, that offers ease of setup and dissolution but carries personal liability for business debts and lacks continuity if the owner dies.

C Corporation

A business structure with a flexible number of public shareholders that is subject to double taxation on both corporate income and shareholder distributions.

Double Taxation

A tax situation in which a corporation pays tax on its corporate earnings, and shareholders pay personal income tax again on their individual earnings or dividends.

S Corporation

A corporation form that can have up to 100 shareholders and is taxed like a partnership, avoiding double taxation by taxing owners at their individual income rates.

Benefit Corporation

A for-profit corporate structure with any number of shareholders that allows a company to balance profit generation with social responsibility and environmental impact.

Limited Liability Company (LLC)

A business structure taxed like a partnership that offers limited liability protection to shield personal assets from business risks and legal actions.

Cooperative

An organization formed when smaller businesses or individuals band together to achieve benefits such as economies of scale and discounts from shared suppliers.

Partnership

A business ownership structure usually larger than a sole proprietorship involving two or more individuals who share skills, profits, and liability without selling stock.

Articles of Partnership

A legal document stating the terms, profit distribution, liability, and operating rules agreed upon by business partners.

Quasi-taxable Entity

A tax status applied to partnerships where the business entity itself does not pay taxes, but files an informational return indicating each owner's share of profits.

Incorporators

A group of individuals who assemble to establish, organize, and create a new corporation.

Board of Directors

An elected governing group that oversees all major operational decisions and strategic proposals within a corporation.

Initial Public Offering (IPO)

The process by which a private business sets a stock price and sells shares to the public to become a public corporation.

Inside Directors

Members of a corporation's board of directors who are also key executives inside the company, such as the Chief Executive Officer or Chief Financial Officer.

Outside Directors

Members of a corporation's board of directors who are not employed by the company but provide valuable external skills and guidance.

Joint Venture

A business agreement between individuals or organizations formed for a specific purpose, where one partner often provides capital and the other provides labor or time.