Better Business 101 – Chapter 6 – Flashcards
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Sole proprietorships
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A type of unincorporated business owned and usually controlled by a single individual.
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Unlimited liability
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If business assets aren't enough to pay business debts, then personal assets, such as a house, can be used to pay the balance. The proprietor can lose an unlimited amount of personal assets.
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Partnership
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A type of business structure in which two or more entities (or partners) share the ownership and the profits and losses of the business.
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Partnership agreement
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A written agreement between the partners of a partnership.
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Capital
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Money in a business
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General partnership
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A type of partnership that is the default arrangement for a partnership and is the simplest of all partnerships to form.
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Limited partnership
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A type of partnership in which these partners are as 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.
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General partners
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Full owners of a partnership business, are responsible for all the day-to-day business decisions, and remain liable for all the debts and obligations of the business.
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Limited partners
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As involved as investors, and as such, are personally liable only up to the amount of their investment in the business. They must not actively participate in any decisions of the business.
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Master Limited Partnership
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A business structure that combines the tax benefits of a limited partnership, but it is similar to a corporation in that it is publicly traded on a securities exchange.
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Limited liability partnership
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A form of business structure in which it protects the partners not only from any debt or liability incurred by the business but also from the liability of another partner.
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Corporation
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A specific form of business organization that is legally formed under state laws. It's considered a separate entity apart from its owners; it has legal rights like an individual, can own property, assume liability, pay taxes, enter into contracts, and sue or be sued.
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C corporation
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Refers to Subchapter C of the Internal Revenue Code by which it is governed.
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S corporation
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A regular corporation that has elected to be taxed under a special section of the Internal Revenue Service code called Subchapter S.
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Shareholders
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When an entity or individual has an ownership interest in the company. (AKA stockholders)
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Stockholders
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When an entity or individual has an ownership interest in the company. (AKA shareholders)
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Apportioned ownership interest
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When the corporation provides the shareholders with stock certificates identifying the number of shares they own.
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Publicly owned corporation
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A corporation regulated by the US Securities and Exchange Commission because the shares of ownership can be traded on public stock exchanges.
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Board of directors
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Members of this group select and hire the business' management team of corporate officers as well as they make the major financing and business decisions for the corporation.
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Chief executive officer
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The one who is typically responsible for the entire operations of the corporation and reports directly to the board of directors.
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Chief financial officer
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The one who reports directly to the CEO and is responsible for analyzing and reviewing the business' financial data, reporting its financial performance, preparing budgets, and monitoring the firm's expenditures and costs.
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Chief operating officer
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The one who is responsible for the day-to-day operations of the organization and reports directly to the CEO.
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First-line managers
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People who directly supervise lower-level employees and help run the business.
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Double taxation
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Occurs when taxes are paid on the same income twice.
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Limited Liability Company
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This business entity combines the corporate advantages of limited liability with the tax advantages inherent in sole proprietorship and partnerships.
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Merger
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When two companies come together cooperatively to form one company.
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Acquisition
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When one company completely buys out another company.
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Synergy
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The effect achieved when two companies combine and the result is better than each company could achieve individually.
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Horizontal merger
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A type of merger in which two companies sell the same types of products and are in direct competition with each other.
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Vertical merger
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A type of merger between two companies that have a company/customer relationship or a company/supplier relationship.
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Product extension merger
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A type of merger between two companies selling different but related products in the same market.
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Market extension merger
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A type of merger between two companies that sell the same products in different markets.
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Conglomeration
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A type of merger between two companies that have no common business areas but instead merge to obtain diversification.
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Articles of organization
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The title of the document filed to create a corporation.
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Cooperative
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A business that is owned and governed by members who use its products or services.
