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Click your mouse anywhere on the screen to advance the text in each slide. After the starburst appears, click a blue triangle to move to the next slide or previous slide. 1 32 p Business Law for a New Century

Quote of the Day “Business underlies everything in our national life, including our spiritual life. Witness the fact that in the Lord’s Prayer, the first petition is for daily bread. No one can worship God or love his neighbor on an empty stomach. ” Woodrow Wilson, United States president 2 32 p Business Law for a New Century

Sole Proprietorships p A sole proprietorship is an unincorporated business owned by one person. p Sole proprietorships are easy and inexpensive to create and operate. p Earnings are reported on the owner’s personal tax returns. 3 32 p Business Law for a New Century

General Partnership p A partnership is an unincorporated association of two or more co-owners who carry on a business for profit. p Each partner is a general partner. p Partnerships are easy to form (so easy that sometimes it happens unintentionally!) p Partners can be held personally liable for the partnership actions and debts. 4 32 p Business Law for a New Century

Professional Corporations p Most states let professional incorporate. p In many states, PCs provide more liability protection than a partnership. p The corporation may be liable for an individual member’s mistakes, but the innocent professionals are not at risk. 32 5 p Business Law for a New Century

Limited Partnerships p Have both general (active) and limited (money-only) partners. p In a limited partnership, only the general partners are personally liable. p In a limited liability limited partnership, the general partner is not personally liable for the debts of the partnership. p Formation of limited partnerships require a filed certificate of limited partnership. 6 32 p Business Law for a New Century

Corporations p Corporations offer limited liability – usually the managers’ and investors’ personal property is not at risk. p Corporate stock can be bought and sold, making investments easy to get. p Corporations involve a lot of expense and effort to create and operate. 7 32 p Business Law for a New Century

Close Corporations p “Close corporation” and “closely held corporation” refer to a corporation whose stock is not publicly traded on a stock exchange. p Common provisions of close corporations: • • 8 Protection of Minority Shareholders Transfer Restrictions Flexibility Dispute Resolution 32 p Business Law for a New Century

“S” Corporations p Shareholders of S corps have the best of all worlds: the limited liability of a corporation and the tax status of a partnership. p The disadvantages of an S corp are: • There can only be one class of stocks. • There can be only 75 shareholders. • Shareholders cannot be partnerships or other corporations. • Shareholders must be U. S. citizens. 9 32 p Business Law for a New Century

Limited Liability Companies p An LLC offers the limited liability of a corporation and the tax status of a partnership, without the disadvantages of an S corporation. p The LLC is popular because it has: • Limited Liability, Favorable Tax Status, Duration, Management, Flexibility p The biggest disadvantage with LLC is the legal uncertainty involved since it is a fairly new type of business. State laws vary, and case precedents are few. 10 32 p Business Law for a New Century

Limited Liability Partnerships (LLPs) p Partners in an LLP are not personally liable for debts of the partnership (whether arising from contract or tort). 32 11 p Business Law for a New Century

Joint Venture p A joint venture is a partnership for a limited purpose. p Nonprofit enterprises do not qualify as a joint venture. 32 12 p Business Law for a New Century

Other Forms of Organization p A business trust is an unincorporated association run by trustees for the benefit of investors (who are called “beneficiaries”). p Cooperatives are groups of individuals or businesses that join together to gain the advantages of volume purchases or sales. 13 32 p Business Law for a New Century

Franchises p Are not actually a separate form of business – they can take almost any one of the ones discussed already. • Franchising is a popular method of starting a business that is a compromise between employment and starting your own business. • Franchisees have freedom to make many choices, but are limited in other ways. 14 32 p Business Law for a New Century

“No one form of organization is right for every business. The proper choice depends upon factors such as sources of financing, tax issues, liability concerns, and the entrepreneur’s goals. ” 32 15 p Business Law for a New Century

Link to the Internet p Clicking on the orange button below will link you to the website for this book. (You must first have an active link to the internet on this computer. ) 16 p Once there, click: p You should then see web links related to that chapter. • • Online Study Guide, then Your choice of a chapter, then Practice, then Internet Applications Click here! Click above to return to the slide show. 32 p Business Law for a New Century