Business Organizations cc licensed ( BY NC ) flickr photo by Thomas Hawk: http://flic.kr/p/9eoP2B

creative commons licensed (BY-ND) flickr photo by Massachusetts Office of Travel & Tourism: https://flic.kr/p/ctVJUm In-class assignment

Sole proprietorship • Easy/inexpensive to form • Single taxation • Few formalities • Limited capital • Limited lifespan • Unlimited Liabilities • d/b/a

Partnership • Easy/inexpensive to form – Partnership agreement a good idea – Partnership Act forms default rules • More access to capital • Limited lifespan • Joint/Several liability

Partnership law Most states (incl. Ala.) have adopted Uniform Partnership Act of 1914 (UPA) and Revised Uniform Partnership Act of 1997 (RUPA) RUPA forms default rules for partnerships

Default? What font do most MS Word documents use? Times New Roman Calibri Are those the only fonts Word can do? Why so prevalent?

creative commons licensed (BY-NC-SA) flickr photo by Earl - What I Saw 2.0: https://flic.kr/p/4JKDDT

Profit split? Equally, unless specifically agreed otherwise

Right to pay for work? No, unless specifically agreed otherwise

Management rights? Equal vote, unless specifically agreed otherwise

Bank of America: http://www.flickr.com/photos/scarequotes/

cc licensed ( BY SD ) flickr photo by Derek Keats: http://flic.kr/p/8SgDT

cc licensed ( BY NC ) flickr photo by Shira Golding: http://flic.kr/p/6GMmTe

Liability for loan?

cc licensed ( BY NC ND ) flickr photo by Matthew Niemi: http://flic.kr/p/KC3LA

Corporations Benefits • limited liability • increased availability of capital (from multiple shareholders) • perpetual duration

Corporations Disadvantages • increased formalities • must hire attorney & file w/ secretary of state to form • Business Privilege Tax • double taxation*

Corporate formation articles of incorporation corporate name purpose (“all legal business”) duration (usu. perpetual) registered office/agent incorporators

Corporate formation • Reserve corporate name with Secretary of State • File articles with probate judge in county of principal place of business

Corporate governance Owners Shareholders elect Board of Directors no management rights Managers Board of Directors hire Officers Officers President, VPs CEO, COO, etc.

Piercing the corporate veil "sham" corporation disregards corporate form shareholders personally liable

Limited Liability Company Hybrid of corporation and partnership • limited personal liability (like corp.) • individual taxation (like partnership) OR corporate taxation (like corporation) • no annual meeting (like partnership) • can be member managed (like partnership) or manager managed (like corporation) • LLC statute forms default rules; can vary by agreement (like partnership)

LLC Formation • Certificate of Formation • LLC name • purpose (“all legal business”) • statement that at least 1 member • registered office/agent • LLC agreement • operating agreement

LLC formation • Reserve corporate name with Secretary of State • File certificate of formation with probate judge in county of principal place of business