1. Stock Market Game

2. What is a Company
Company – A business or association usually formed to manufacture or supply products or service for profit.
Can be:
Partnership
Limited Liability Partnership (LLP)
Corporation
Sole Proprietor

3. Partnership
In a partnership – Partners share the profits or losses of the business in which they have invested
Personally liable for company debt
Your assets (things that you own) will cover the company debt

4. Limited liability Partnership
Transfers much of the firm’s personal liability from the partners to the partnership

5. Public Corporation
Is a company with publicly traded shares that anyone can buy in a stock market.
Is also legally separated from the stockholders (people that own the stock) and the managers that run it
Stock holders own the company

6. Corporation Advantages
Stockholders are not responsible for the company’s debt
A corporation continues to exist even if the stockholders or managers change
Stockholders can easily sell their ownership shares through the stock market

7. Private Corporation May be owned by an individual
Or privately sell stocks to fund the business
Stocks are not sold publicly on the stock market

8. Sole Proprietor
Company is owned and run by one individual who receives all of its profits and bear all of its losses.
Owner is personally liable for all of the companies debt

9. Stocks Initial Public Offering – IPO
Initial sale of stock to the public by investment bankers
Underwriter – Investment banker that buys an entire new securities issue from a company and resells it

10. Stock Exchanges 3 Major stock markets NYSE – New York Stock Exchange
NASDAQ – National Association of Securities Dealer Automated Quotation
AMEX- American Stock Exchange

11. Types of Stock
Common Stock
Preferred Stock

12. Common Stock
Shares of the company do not guarantee a dividend (Part of the companies profit that are shared with the stockholder)
Dividend may be more then preferred stock holders
Right to vote for Board of Directors
Right to vote at Annual Meeting

13. Preferred Stock
Guaranteed dividend
No voting rights

14. Regulating Agency
Securities and Exchange Commission (SEC)

15. Stock Terms
Earnings – The amount of money that remains after subtracting the companies expenses from its revenue
Investor – Someone who risks funds with the hope of it increasing in value

16. Corporations Registered by a state and operates apart from its owners
Three Types
C-Corporation
S-Corporation
Non-Profit Corporation

17. C-Corporation Pays taxes on earnings Shareholders pay taxes as well
File Certificate of Incorporation with the state
Issue stocks
Shareholders – Owners of Corporation
Required to have a Board of Directors

18. C-Corporation Advantages Status – Corporations get help getting loans
Limited Liability – Only liable up to the amount of their individual investment
Perpetual Existence – Continuous life
Owners can create pension and retirement funds and offer profit sharing
Tax Advantage – Deduct certain expenses from their reported income (Salaries and Contribution to benefit plans)

19. C-Corporation Disadvantages
Expensive to start up – Cost $500 to $2500 to create
Taxed – Corporations income is heavily taxed
Corporation pay tax on profits
Shareholders pay tax on dividends

20. Subchapter S Corporation
Taxed like a partnership
Avoids double taxation
Advantage
Profits taxed only once at shareholders personal tax rate
S Corp is not a taxpaying entity

21. Subchapter S Corporation
Disadvantage
Can have no more than 75 stockholders who must be US citizens
Only have one class of stock
Cash businesses are S Corps
If business produces enough cash, the form works
If business shows a large taxable profit but has not generated enough cash to cover the taxes, the owners must pay out of their earnings

22. Nonprofit Corporation
Businesses that benefit certain causes in the community
Make money for reasons other than the owner’s profit
Business can make profit, however, the profit must remain within the company and not be distributed to shareholders

23. Limited Liability Company
Benefits
Simpler to start up than a corporation
Allows for flexibility of a partnership structure
Protects it owners with the limited liability of a corporation
Not subject to double taxation
Not limited on the number of members or their status

24. Limited Liability Company
Company whose owners and managers enjoy limited liability and some tax benefits, but it avoids some restrictions associated with S Corporation