COB 218 Lecture Notes - Lecture 11: S Corporation, Operating Agreement, Sole Proprietorship
15 Nov 2016
School
Department
Course
Professor
Document Summary
Pros: receive all profits, easier/ less costly to start, allows flexibility. Cons: personally liable for all losses/ liabilities, lacks continuity on death of proprietor. Franchises: fra(cid:374)(cid:272)hisor allo(cid:449)s fra(cid:374)(cid:272)hisee to use the trade(cid:373)ark i(cid:374) the sale of goods/ ser(cid:448)i(cid:272)es. Manufacturing or processing plant arrangement: coca cola. Limited liability partnership: formed under state law, limits personal liability from the malpractice of other partners. Limited liability companies: formed & operated in compliance with state law. Advantages: profits pass through & taxes are paid individually. Operating agreement: management, dividing profits, transfer of membership interests, will it be dissolved on death/ departure of member owe fiduciary duties. Corporate officers & executives hired by the board of directors. Rights of shareholders: preemptive rights (can buy stock before others), dividends, net profits, surplus, inspection rights, transfer shares, shareholders derivative suit (can sue on behalf of corporation proceeds go back to corporation) Legality (my drug dealer ripped me off)
