Chapter 6: Forms of Business Ownership

acquisition

occur when one company completely buys out another company

liability

is the obligation to pay a debt, such as an account payable or a loan

privately owned corporation

are corporations that are regulated by the Securities and Exchange Commission

board of directors

Group of individuals who have legal responsibility for the actions of the corporation, usually set policy and make the major business and financing decisions

limited liability company (LLC)

are companies in which the owners have limited personal liability for the debts and the actions of the company

product extension merger

is a merger between two companies selling different but related products in the same market

capital

is investments in the form of money, equipment, supplies, computers, and other tangible things of value

limited partner

are involved as investors and, as such, are personally liable only up to the amount of their investment in the business and must not actively participate in any decisions of the business

publicly owned corporation

are corporations that are regulated by the Securities and Exchange Commission

C corporation

are corporations governed by Subchapter C of the Internal Revenue Code

limited partnership

are businesses where at least one partner controls a business's operations and is personally liable

S corporation

are regular corporations that have elected to be taxed under a special section of the Internal Revenue Code called Subchapter S

conglomeration

is a combination of a number of different, perhaps even unrelated, businesses into a single corporation

market extension merger

is a merger between two companies that sell the same products in different markets

shareholder

have an ownership interest in a company

cooperative

a business that is owned and governed by members who use its products or services

merger

occur when two companies of similar size mutually agree to combine to form a new company

sole proprietorship

are businesses that are owned, and usually operated, by a single individual

corporation

are a specific form of business organization that is a legal entity separate from the owner or owners

nonprofit organization

are businesses that do not pursue profits but instead seek to service the community through social, educational, or political means (qualifies for tax-exempt status by the IRS)

stockholder

are owners of a company, and although they do not have direct control over the day-to-day management of a company, they do have a say in the composition of its board of directors

double taxation

Occurs when taxes are paid on the same income twice

not-for-profit organization

not required to operate for the benefit of the public good (can simply serve the goals of its members)

synergy

is the effect achieved when two companies combine, in which the result is better than each company could achieve individually

general partners

are full owners of the business, are responsible for all the day-to-day business decisions, and remain liable for all the debts and obligations of the business

partnership

is a type of business entity in which two or more entities (or partners) share the ownership and the profits and losses of the business

unlimited liability

means that if business assets are not enough to pay its debts, then personal assets, such as the sole proprietor's house, personal investments, or retirement funds, can be used to pay the balance

general partnership

are businesses where every partner participates in the daily management tasks of the business, and each has some degree of control over the decisions made

partnership agreement

formalize the relationship between the business partners

vertical merger (vertical integration)

occur when two companies that have a company/customer relationship or a company/supplier relationship merge

horizontal merger

occur when two companies that share the same product lines and markets and are in direct competition with each other merge