Published on January 11
What Is It?
A sole proprietorship is a form for conducting business by a single person as an owner. The owner is often referred to as a “sole proprietor” or a “proprietor”. A proprietor is may conduct business in his legal name, a non-deceptive assumed name, or a trade name. For example, John Smith could conduct business as “John Smith”, “John Smith’s Furniture Store” or “Excellent Furniture”. The defining legal aspect of a sole proprietorship is that there is no distinction between the business and the proprietor.
Although a sole proprietorship can have only one owner, sole proprietorships may have an unlimited …
Added in Sole Proprietorships
Published on January 11
What is a Corporation?
A corporation is a business organization which is chartered by a state (known as the state of incorporation) in accordance with the state’s incorporation statute. In the eyes of the law, a corporation is a separate person – just like you and I are separate people. A corporation can own both personal property and real property, sue, be sued, commit crimes, be victimized by crimes, make decisions, hire and fire employees and give gifts. Unlike general partnerships and sole proprietorships, a corporation is a “going concern”. The lifetime of a corporation can be perpetual and completely separate …
Added in Corporations
Published on January 11
What is a Limited Liability Company?
A Limited Liability Company (“LLC”) is an entity which is taxed like a partnership but affords its owners, known as “members,” limited liability in the same manner as a corporation. Members can be individuals, corporations, or other LLCs and there is generally no minimum or maximum number of members. Like a corporation, LLCs are distinct legal entities which can sue, be sued, commit crimes, be victimized by crimes, hire, fire, give gifts, make decisions, and hold property in their own name. LLCs are created and governed by state law.
Although not as flexible as partnerships, LLCs …
Added in Business Startup, Limited Liability Companies
Published on January 7
What is a Limited Liability Partnership?
A Limited Liability Partnership (“LLP”) is a partnership in which the partners are not personally liable for the debts of the partnership or other partners. Unlike a limited partnership, all partners in a LLP can receive limited liability. With the exception of limited liability, the rules governing limited partnerships are extremely similar to the rules governing general partnerships. Most notably, LLPs are taxed in the same manner as general partnerships. For more information on general partnerships, see the article on general partnerships in this series.
Although all states allow some form of a limited liability partnership, …
Added in Limited Liability Partnership, Limited Partenerships, Online Business
Published on January 7
What is a Partnership?
A partnership is a business entity formed by two or more people who operate a business for profit as co-owners. For the purposes of creating a partnership, a “person” is any entity with its own legal status, including not only a human being but a corporation, trust, government entity, or another partnership. There are a variety of possible Partnerships are governed by the law of the state in which they are associated. Partnerships can take several forms including: general partnerships, limited partnerships, limited liability partnerships, and occasionally single member partnerships. Each of these is subject to its …
Added in Business Entities, Business Startup, General Partenerships, Limited Liability Companies, Limited Liability Partnership, Limited Partenerships, Online Business
Published on January 7
What is the Sarbanes-Oxley Act?
The Sarbanes-Oxley Act of 2002, also known as “SOA” or “SOX” is a congressional act with established a series of laws aimed at improving corporate governance, reducing corporate fraud, and eliminating deceptive accounting practice. The main provisions of Sarbanes-Oxley can be divided into three categories:
Accounting Oversight: One of the primary reforms of Sarbanes-Oxley was the creation of the Public Company Accounting Oversight Board.
Corporate Governance Reforms: Sarbanes-Oxley includes a series of reforms …
Added in Corporations, Large Corporation, US Laws
Published on January 7
What is a Professional Corporation?
A professional corporation (“P.C.”) is a business entity formed under special state statutes which allow people that would otherwise not be able to organize as corporations to receive most of the benefits of the corporate form, subject to certain additional limitations. Under the Revised Model Business Corporation Act and the law of most states, certain professions, such as doctors, lawyers, accountants, and architects are prohibited from forming corporations for the purpose of practicing their profession because of a fear that organizing as a corporation would allow them to limit malpractice liability. Unlike an ordinary corporation, professionals …
Added in Corporations
Published on January 7
A Not-For-Profit Corporation Is Not Automatically a Tax Exempt Organization.
There is often confusion between a not-for-profit corporation and a tax exempt organization. They are not necessarily one in the same. A not-for-profit corporation is organized under the law of a state for non-profit purposes. A tax exempt organization is a designation granted by the Internal Revenue Service of the Federal Government.
What is a Tax Exempt Organization?
A tax exempt organization is an entity granted immunity from taxation by the Federal Government in accordance with §501 of the Internal Revenue Code of the United States (26 U.S.C. §501). There are numerous types …
Added in Corporations, Taxation
Published on January 7
In certain situations, shareholders may find it advantageous to enter into agreements with other shareholders regarding how the company should be run or who will run the company. These agreements, known as “shareholder agreements” or sometimes “vote pooling agreements” or “block voting arrangements” are generally permissible and can pertain to a variety of topics. The specific rules governing shareholder agreements varies from state to state, however most states follow some version of the Revised Model Business Corporation Act (“RMBCA”). Section 7 of the RMBCA states the rules regarding shareholder agreements.
The most common types of shareholder agreements are:
Voting …
Added in Business Entities, Corporations, Helpful Business Info, Large Corporation
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