LGS 200 Ch 17 lecture notes
LGS 200 Ch 17 lecture notes LGS 200 - 008
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LGS 200 - 008
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This 2 page Class Notes was uploaded by Conner Jones on Tuesday March 22, 2016. The Class Notes belongs to LGS 200 - 008 at University of Alabama - Tuscaloosa taught by Charlye S. Adams in Summer 2015. Since its upload, it has received 84 views. For similar materials see Legal Environment of Business in Law and Legal Studies at University of Alabama - Tuscaloosa.
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Date Created: 03/22/16
Chapter 17: Small business organizations Introduction: When choosing a business, you should consider o Ease of creation o Owners’ liability o Tax considerations o Need for capital Sole proprietorship The owner IS the business Advantages: o Complete control, receives all profits o Flexibility, ease of creation/maintenance Disadvantages: o Personally liable for all torts/contracts o Lacks continuity after death o Difficult to raise financing Hot dog vendor example (Ben takes out first loan, Liz takes out second loan (partnership/Ben/Liz)) Partnerships The association of two or more persons to carry on a business of equal right in management for profit agency concepts and partnership law o partnerships are governed by common law and statutory law uniform partnership act (UPA) – in absence of partnership, UPA is adopted by most states which governs the partnership tax treatment o partnership is treated as a “pass through” entity, only taxed as individual not as an entity. Formation o Can be written or oral, basically a contract; must be in writing to be enforceable by a court Duration o For a term – a specific end date o At will – perpetual Rights of partners o Management: equal, each one vote, majority wins; needs unanimous consent for action o Interest in the partnership: equal profits, losses shared as profits shared o Compensation: none o Inspection of the books: absolute right to see books whenever you want to o Accounting: you can get an accountant to come in at any time and get value of business, check for fraud, etc. o Property rights: property acquired by partnership remains partnership property, individual has no right to sell, transfer partnership property (company car) Duties/liabilities of partners o Duty of care – not going to partake in any unlawful activities (Ponzi scheme) o Duty of loyalty – not going to compete with partnership General partners: unlimited liability Joint liability state: all partners must be named in lawsuit