Unit 2 Business Entities Quiz

Limited Liability Companies (LLC’s) formed under the laws of one of the states of the United States must have a minimum of two shareholders and a maximum of no more than 50 shareholders.

LLCs may be single-member entities, that is, may have any number of members they choose, including single members, and unlike in a sociedad de responsibilidad limitada, in a LLC membership interests can be transferred with whatever approval procedures the members establish in the operating agreement of the LLC

U. S. business entities other than joint ventures must be formed according to national laws, that is, laws of the federal government, and must register with the federal government in order to be legal entities.

U.S. law  requires joint ventures to do business under a company name, but only if the name includes the name  of the active associate of the joint venture

U. S. Partnerships can be either general partnerships, in which all partners are general partners who have management rights and are liable for partnership debts, or limited partnerships, in which there are general partners and also limited partners, who have no management rights or duties and whose liability for partnership debts is limited to their capital contributions

Federal, not state laws, govern the formation and operations of business entities such as corporations and LLCs in the U. S., and corporations, like all taxpayers in the U. S., must register with the Internal Revenue Service of the United States government

Newly formed corporations in the U. S. may not choose the method by which their income is taxed, but every corporation must pay a federal income tax based on its net income

If a corporation files proper documentation with the IRS electing “S” status, it will be treated as  a partnership for income tax purposes, which means the corporation itself pays no income tax and only monies distributed to its owners are taxed

Directors of corporations are persons who are elected to boards of directors by majority votes of the shareholders of the corporation to manage the corporation, and minority shareholders have no rights to appoint members to the boards of directors

Corporations which have only one shareholder are not separate legal persons from the owner or shareholder, but they can sue or be sued, but do not have to appear in court through their general partner

Corporations, unless their corporate shields are pierced, provide limited liability for their shareholders, which means the shareholders are shielded from liability for corporate debts in excess of the shareholders’ capital contributions

Limited Liability Companies (LLCs) in the United States are increasing in number and becoming increasingly popular forms in which to establish a new business

U. S. corporations formed under state law are not required to have a statutory minimum amount of capital, and the purpose of the corporations’ registered agents is to manage all the business affairs of the corporation

Certificates of incorporation are private documents which show very detailed information about the corporation and its owners, and corporate by-laws are public documents which are recorded and filed with the government of the state in which the corporation is formed

Once a corporation is formed and has existed for twenty-five years without any claims against it, its corporate shield will completely protect its shareholders from liability for corporate debts, no matter what the corporation may do in the future

Under partnership law in the United States, all partners of general partnerships are liable for partnership debts, and the general partnerships do not file written partnership agreements with the government of the state in which they were formed

There are no special or specific words or abbreviations which must be included in the names of corporations, and a corporation can reserve its name for future use by filing the name with the United States Commissioner of Proper Corporate Names in Washington, D. C.

Corporations can be dissolved by a decision of its board of directors or by court order, and commissioners are not appointed in advance before a corporation can be dissolved

Persons who own interests in limited liability companies are called that company’s shareholders or stockholders, and persons who own interests in corporations are called that companies’ members

Limited liability company operating agreements establish the rules for governing the LLC’s internal affairs but are private documents that are not on file with the government or available to the public, and members of LLCs may contribute money or other things of value, including their services in exchange for their membership interests, unlike members of sociedades de responsibilidad limitada mexicana

Sociedades en nombre colectivo mexicanas and U. S. general partnerships are similar in the sense that partners are jointly and severally liable for partnership debts, and the following is a valid definition of a general partnership: an association of two or more persons to carry on as “co-owners” a business for profit

General partnerships do not have to have written partnership agreements and they can exist even if they are not registered with the federal government and have not filed papers with the Secretary of State in the state in which their principal offices are located

Unless the partners in general partnerships agree differently, the first partner who signs the partnership agreement will always have majority interest

U. S. joint ventures are governed by the federal statute called the United States Joint Venture Act and common law does not apply to them

All U. S. business entities require the services of a notary public to be formed, require a U. S. licensed attorney to prepare all the corporate documents, and are subject to exceptionally strict legal formalities in order to do business