ACCT 421 Chapter 12: ACCT 421 Chapter 12 Learning Objectives
1 Dec 2016
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Lo 12-1: discuss the legal and nontax characteristics of different types of legal entities. Entities that differ in terms of their legal characteristics include corporations, limited liability companies, general partnerships, limited partnerships, and sole proprietorships. Corporations are formally organized by filing articles of incorporation with the state. They are legally separate entities and protect their shareholders from the liabilities of the corporation. State corporation laws dictate interactions between corporations and shareholders. As a result, shareholders have limited flexibility to customize their business arrangements with the corporation and other shareholders. State corporate governance rules do, however, facilitate initial public offerings. Limited liability companies are formally organized by filing articles of organization with the state. Like corporations, they are separate legal entities that shield their members from liabilities. In contrast to corporations, state llc statutes give members a great deal of latitude in customizing their business arrangements with the llc and other members.
