BUS-L 201 Chapter Notes - Chapter 9: Limited Liability Company, Internal Revenue Code, Limited Liability Partnership
Document Summary
Reasons to form a sole proprietorship - easy and inexpensive to form, no formalities, few people consider the business formation decision. If they want to but no liability to. No more than 100 shareholders one class of shares owners can only be individuals and trusts. Reasons to organize as a corporation - 1. no one has unlimited liability--good for risks: attracts large amount of capital. Disadvantages of s corporation - 1. ability to get capital is severely limited: hard to sell shares or you"re restricted from it. Professional corporation - shareholders have unlimited liability to clients--would rather choose llp. Close corporations - controlling shareholders are the only managers (like an s corp) Publicly held corporation - shares are generally available to public investors. For profit corporations - issue stock to shareholders for their profit which may be returned as dividends or increase market value of shares. Not for profit corporations - don"t issue stock or expect to make profit.
