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ARE 5.0 PCM Exam with 100% Correct | Latest Updated Graded A+
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ARE 5.0 PCM Exam with 100% Correct | Latest Updated Graded A+
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ARE 5.0 PCM Exam with 100% Correct |Latest Updated Graded A+
Advantages: liability protection, continuity independent of any changes in ownership, and ease in
raising capital
Disadvantages: initial cost to establish business and necessary paperwork/formal requirements
Articles of Incorporation - ✔✔A set of formal documents filed with the state government
to legally establish the creation of a new corporation.
Certificate of Authorization - ✔✔Business licensed filed with the state in order for the firm
to conduct business and provide professional services to the public.
Shareholders - ✔✔Owners of the corporation in proportion to the number of shares they own.
Elect directors.
Directors - ✔✔Have fiduciary duty to act in the best interest of the shareholders and
are responsible for broad policy decisions. Elect officers.
Officers - ✔✔Carry out the day-to-day management of the corporation.
,S Corporation ("Closely Held") - ✔✔Corporation owned by shareholders who are actively
engaged in the practice. Limited to small business corporations
To qualify, a corporation must be a domestic company with no more than 100 shareholders.
Shareholders have to be U.S. citizens or legal residents.
Not required to pay federal/income tax; each shareholder reports their share of the
business's profit (or loss) on their personal tax return.
Professional Corporation - ✔✔Company owned by shareholders with stricter restrictions on
ownership, liability protection and insurance. All shareholders, directors, and officers must be
licensed architects in the state in which they practice.
Limited Liability Corporation - ✔✔Hybrid entities that combine the characteristics of a
corporation with those of a partnership or sole proprietorship. Similar to a corporation in that
LLCs separate business assets from personal assets, reducing the level of liability. Similar to a
partnership in that LLCs "pass through" their profits (or loss) so that they are taxed on the
owner's personal tax returns.
Most architectural firms that are LLCs are "closely held".
Easier to set up and operate than a corporation.
, Operating Agreement - ✔✔Legal documents used when forming an LLC to establish rules
and guidelines for how the company will operate, including percentages of ownership. Such
an agreement is mandatory in a few states, and usually done even in states where it is optional.
Joint Venture - ✔✔Temporary association of 2 or more persons/firms for the purpose
of completing a specific project or achieving a specific goal. Dissolved when the
project is completed or the goal is reached.
Teaming Agreement/Memorandum of Understanding - ✔✔Defines the roles, responsibilities,
and contractual relationships that will be established if the firms are awarded the project and the
joint venture is formed.
Equal Employment Opportunity Law - ✔✔Illegal for an employer to ask about age, date of
birth, marital status, national origin, race, or maiden name.
Civil Rights Act of 1991 - ✔✔Illegal to discriminate on the basis of sex, race, color, religion,
or national origin.
Americans with Disabilities Act (ADA) - ✔✔Illegal to discriminate on the basis of disabilities.
Equal Pay Act - ✔✔Federal law that prohibits pay discrimination on the basis of sex
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