Business Ownership and Growth

Flashcards covering various business ownership structures, growth strategies, and related terminology discussed in the lecture notes.

Limited Liability Company (LLC)

A business ownership that combines the benefits of a corporation and a partnership, avoiding double taxation and providing limited protection for acts and debts, with more management flexibility and fewer restrictions.

Not-for-profit corporation (Nonprofit)

A corporation organized to provide a social, educational, religious, or other service rather than to earn a profit, primarily to ensure limited liability, and potentially receive tax-exempt status by meeting IRS guidelines.

Joint Venture

An agreement between two or more groups to form a business entity to achieve a specific goal or to operate for a specific period of time, usually dissolving once the goal is reached or period elapses.

Syndicate

A temporary association of individuals or firms organized to perform a specific task that requires a large amount of money, usually dissolved as soon as its purpose has been accomplished.

Initial Public Offering (IPO)

The term used to describe the first time a corporation sells stock to the general public.

Merger

The combining of two corporations or other business entities to form one business.

Acquisition

Essentially the same as a merger, but the term generally is used in reference to a large corporation's purchase of another corporation.

Hostile Takeover

A situation in which the management and board of directors of a firm targeted for acquisition disapprove of the merger.

Horizontal Merger

A merger between firms that make and sell similar products or services in similar markets, tending to reduce the number of firms in an industry and thus may reduce competition.

Vertical Merger

A merger between firms that operate at different but related levels in the production and marketing of a product, generally where one of the merging firms is either a supplier or a customer of the other.

Conglomerate Merger

A merger that takes place between firms in completely different industries.

Sole Proprietorship

A form of business ownership where all business profits become the property of the owner, who is also personally responsible for all business debts; it is the simplest form of business to enter, control, and leave, and pays no special taxes.

General Partners

Partners who are responsible for running the business and for all business debts.

Limited Partners

Partners who receive a share of the profit in return for investing in the business, but are not responsible for business debts beyond the amount they have invested.

Partnership Agreement (Articles of Partnership)

A written agreement setting forth the terms of a partnership.

Limited Liability Partnership (LLP)

A partnership type where partners may have limited liability for the malpractice and negligence of the other partners, provided special requirements are met.

Corporation

An artificial person created by law, with most of the legal rights of a real person, including the right to start and operate a business, to buy or sell property, to borrow money, to be sued or sue, and to enter into contracts.

Stockholders

The people who own a corporation's common or preferred stock, entitled to receive any dividends paid by the corporation, and common stockholders can vote either in person or by proxy.

Limited Liability

A major advantage of the corporate form of ownership where stockholders are not liable for the corporation's debts beyond the amount they paid for its stock.

Double Taxation

A major disadvantage of a large corporation, where all profits are taxed once as corporate income and again as personal income because stockholders must pay a personal income tax on their dividend income.

S Corporation

A corporation that is taxed as though it were a partnership but enjoys the benefit of limited liability, requiring a number of criteria to be met.