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Ch. 5 How To Form A Business Key Terms: Sole Proprietorship Partnership Corporation

This document defines key terms related to forming different types of business entities. It discusses sole proprietorships, partnerships including general, limited, and limited liability partnerships. It also covers S corporations, limited liability companies, mergers, acquisitions, and franchising. The terms define different ownership structures and levels of liability for business owners.

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Xiola Bleu
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33 views

Ch. 5 How To Form A Business Key Terms: Sole Proprietorship Partnership Corporation

This document defines key terms related to forming different types of business entities. It discusses sole proprietorships, partnerships including general, limited, and limited liability partnerships. It also covers S corporations, limited liability companies, mergers, acquisitions, and franchising. The terms define different ownership structures and levels of liability for business owners.

Uploaded by

Xiola Bleu
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Ch.

5 How to Form a Business


Key Terms

Sole proprietorship - A business that is owned and managed by one person

Partnership - A legal form of business with 2 or more owners

Corporation - A legal entity with authority to act and have liability apart from its
owner

Unlimited Liability -The responsibility of business owners for all of the debt of the
business

General Partnership - A partnership in which all owners share in operating the


business and in assuming liability for the businesses
debts

Limited Partnership - A partnership with one or more general partners and one or
more limited partners

Limited Liability - The responsibility of a businesses owners for losses only up to


the am’t they invest, limited partners and shareholders
have limited liability

General Partner - An owner (partner) who has unlimited liability and is active in
managing the firm

Limited Partner - An owner who invests money in the business but does not have
any management responsibility or liability for losses
beyond the investment

Master Limited Partnership (MLP) - Partnership that looks much like a corp. ( in
that it acts like a corp. and is traded on
a stock exchange) but is taxed like a
partnership and thus avoids the corp.
income tax

Limited Liability Partnership - A partnership that limits partners risk of losing their
personal assets to only their own acts and
omissions and to the acts and omissions of
people under their supervision

S Corporation - A unique gov’t creation that looks like a corp. but is taxed like sole
proprietorships and partnerships

Limited Liability Comp. (LLC) - A comp. similar to an S corp. but without the
special eligibility requirements

Merger - Two firms forming one company

Acquisition - One companies purchase of the property and obligations of another


comp.

Vertical Merger - The joining of two companies involved in different stages of


related business

Horizontal Merger - The joining of two firms in the same industry

Congiomerate Merger - Joining of firms in completely unrelated industries

Leveraged Buyout (LBO) - An attempt by employees, mgm’t, or a group of


investors to purchase an org. primarily through
borrowing

Franchise Agreement - Arrangement were someone with a good idea for a


business sells the rights to use the business name
and sell a product or svc to others in a given territory.

Franchisor - A comp. that develops a product concept and sells others the rights
to make and sell the products
Franchise - The right to use a specific business’s name and sell it’s product or svc
in a given territory

Franchisee - A person who buys a franchise

Cooperative - A business owned and controlled by the people who use it


(producers, consumers, or workers with similar needs who
pool their resources for mutual gain)

Conventional Corp. (C) - A state chartered legal entity with authority to act and
have liability separate from it’s owners - it’s
stockholders

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