Forms of Business Structures

These flashcards cover key terms and concepts related to forms of business structures, including sole proprietorships, partnerships, and corporations.

Sole Proprietorship

The simplest form of business, where one individual is fully responsible for all debts and obligations.

Unlimited Liability

A situation where the sole proprietor is personally responsible for all debts and obligations of the business.

Partnership

An agreement between two or more individuals to operate a business and share profits.

General Partnership

A type of partnership where all partners share management responsibility and personal liability for business debts.

Limited Liability Partnership (LLP)

A partnership where some partners have limited liability, protecting them from personal obligations exceeding their investments.

Corporation

A legal entity created by legislation that provides limited liability to its shareholders.

Limited Liability

Shareholders are only liable for business debts up to the value of their shares.

Public Company

A corporation with shares that are publicly traded on stock exchanges.

Private Company

A corporation that does not publicly trade its shares and typically has a limited number of shareholders.

Incorporation

The process of legally declaring a corporate entity as separate from its owners.

Articles of Incorporation

Documents filed to establish a corporation, outlining its structure and governance.

Certificate of Incorporation

A document issued to a corporation upon successfully meeting incorporation requirements.

Business Judgement Rule

Legal principle that protects directors' decisions made in good faith from judicial review.

Oppression Remedy

Legal recourse available to shareholders who believe they have been treated unfairly by the corporation.

Derivative Action

A lawsuit initiated by a shareholder on behalf of a corporation against third parties, including management.