Business Entities


Questions to Consider

Consider these questions while reading this module:

  • What are the traditional forms of non-corporate business organization?
  • What is a sole proprietorship? What are its advantages and disadvantages?
What are the differences between a general partnership and a limited partnership?
  • How is each created? How long does it last?
  • Should the owners spell out their rights and liabilities in an agreement? Why? What should it include?
  • What is the owner's liability to third parties? What is the liability of a new owner added to an existing company?
  • How is the entity taxed?
  • What law governs this type of entity?
  • What are the advantages and disadvantages of each entity?
How do limited liability companies and limited liability partnerships fulfill needs not met by traditional forms of business organizations?
  • What are the features, advantages and disadvantages of these two entities?
What are the major characteristics of C and S Corporations?
  • What is the process for forming a corporation?
  • What are the functions of shareholders, directors and officers in managing the affairs of a corporation
  • How do officers and directors manage a corporation? What duties do they owe each other and the corporation?
  • What rights do shareholders have re voting? Inspecting corporate books and records?
  • When will the courts "disregard" the corporate entity to "pierce the corporate veil" and hold shareholders personally liable for a corporation's debts?
  • Whatis the difference between the "duty of loyalty," the "duty of care," and the “duty of good faith?”
  • Whatis the business judgment rule and when (and why) does it protect officers and directors?