Key Terms
Creditors can reach personal assets
Home, car, bank accounts, retirement accounts.
BUY/SELL AGREEMENT
Articles of partnership typically include one. Sets how to value and buy out a withdrawing partner's share.
Limited partner
Liability capped at their investment amount. Cannot participate in day-to-day management.
FORMATION
Must comply with state law (unlike general partnerships, which need no filing).
COMMON INDUSTRIES
Fast food, hotels, tax preparation services.
INTERNATIONAL USE
US businesses use franchises to operate in countries that restrict foreign business ownership. The local franchisee (a c
DELAWARE NOTE
Many corporations incorporate in Delaware. Delaware chancery courts are known for fast, predictable, expert application
SHAREHOLDERS
Elect the board. Do NOT run operations.
CLOSELY HELD CORPORATION
Small number of shareholders. PUBLICLY TRADED
CORPORATION
Large number of shareholders; share value set by supply and demand on exchanges.
PARENT COMPANY
A corporation that owns all the stock of another corporation. WHOLLY OWNED SUBSIDIARY: The corporation being fully owned
CLASSES OF STOCK
Corporations can create different classes of shareholders. Different classes may have different voting rights or dividen
TAXATION (most flexible of all entity types)
LLC can choose each year how it wants to be taxed:
COMMON USERS
Major accounting firms, law firms, medical practices.
WHY IT STILL EXISTS
Some states have not updated their professional licensing laws to allow LLPs or LLCs for certain professions. PC is the