LEGL Test #4 Questions And Answers
partnership liability Joint and several liability
- If the partnership is sued, all can be sued or just one can be sued for the whole amount
Partnership Taxation all business income subject to personal taxation, divided equally
- individual filing
Indemnifica...
- If the partnership is sued, all can be sued or just one can be sued for the whole amount
Partnership Taxation all business income subject to personal taxation, divided equally
- individual filing
Indemnification the right of a partner to be reimbursed for expenditures incurred on behalf
of the partnership
- if someone sues and you have to pay more than your share, partners will reimburse
corporation A business owned by stockholders who share in its profits but are not
personally responsible for its debts
- shareholders, by-laws, formal structure
Corporation Duration Can have perpetual existence
, LEGL Test #4 Questions And Answers
Corporation Liability limited liability
- limited to your investment
Corporation Taxation double taxation
- Corporate tax + personal tax (unless S corp)
- Pays its own taxes (corporate)
- Taxed again when money reaches the shareholders
- Small corporations (less than 100 shareholders) do not have to pay the corporate tax
Corporate Structure - shareholders
- board of directors
- officers
shareholders provide the money, elect the members of the board of directors
board of directors make big picture decisions, appoint officers
, LEGL Test #4 Questions And Answers
officers - CEO, CFO, secretary
- manage day to day business
Veil Piercing make shareholder's personally liable for the corporation's debts and
liabilities, would only be seen in closely held companies
- if the owners do not treat the company as a separate thing then the court will not either (treated
like the owner and their personal assets)
- alter ego test
S corporation a form of corporation that avoids double taxation by having its income
taxed as if it were a partnership
- small (100 or less)
- corporate structure
- limited liability
- partnership taxes
, LEGL Test #4 Questions And Answers
what must non-profits be? corporations
LLC/LLP hybrid between a corporation and a partnership, limited liability and taxed like
a partnership
- limited liability company
LLC Duration May be perpetual
LLC Taxation - flexible
- federal will ask if they want to be taxed as a partnership, corporation, or S corp
LLC liability limited liability
- limited to investment
LLC formation - Check if name is trademarked or reserved
- Develop and sign operating agreement
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