1. OVERVIEW OF BUSINESS ORGANIZATIONS

2. Introduction Sole Proprietorship Partnerships –General Partnership –Limited Partnership –Limited Liability Partnership Corporation –Close Corporation –Publicly Held Corporation –S Corporation Limited Liability Company

3. Factors to Consider in Choosing Forms of Business Organizations Creation Control Limited liability Taxation Duration Ability to raise capital Advantages Disadvantages

4. SOLE PROPRIETOR- SHIP C CORPORATION PARTNERSHIPS CORPORATION LIMITED LIABILITY COMPANY CREATION CONTROL LIABILITY ABILITY TO RAISE CAPITAL

5. SOLE PROPRIETOR- SHIP C CORPORATION PARTNERSHIPS CORPORATION LIMITED LIABILITY COMPANY TRANSFER- ABILITY OF OWNERSHIP CONTINUITY TAX PAYING ENTITY? TAX FORM

6. SOLE PROPRIETOR -SHIP C CORPORATION PARTNERSHIPS CORPORATION LIMITED LIABILITY COMPANY ADVANTAGES DISADVAN- TAGES

7. SOLE PROPRIETORSHIP Creation Control Limited liability Taxation – Tax Form: Schedule CSchedule C Duration Ability to raise capital Advantages Disadvantages

8. PARTNERSHIPS

9. Types of Partnerships General GP GP GP GP Limited GP PassiveInvestor PassiveInvestor PassiveInvestor

10. GENERAL PARTNERSHIPS

11. The UNIFORM PARTNERSHIP ACT defines a partnership as: an association of 2 or more persons carrying on a business as co-owners for profit

12. GENERAL PARTNERSHIP CREATION: CONTROL: LIABILITY: TAXATION: Form 1065Form 1065 DURATION: ABILITY TO RAISE CAPITAL: ADVANTAGES: DISADVANTAGES:

13. LIMITED PARTNERSHIPS Georgia Filing Procedures

14. LIMITED PARTNERSHIP CREATION: CONTROL: LIABILITY: TAXATION: DURATION: ABILITY TO RAISE CAPITAL: ADVANTAGES: DISADVANTAGES:

15. Corporations

16. Incorporation Where to Incorporate Steps in Incorporation –Preparation of the articles of incorporation –Signing and authenticating the articles by one or more of the incorporators –Filing the articles with the Secretary of State and paying all required feesSecretary of State –Issuance of the certificate of incorporation by the Secretary of State –Holding an initial organizational meeting

17. Corporate Managerial Control Shareholders Board Of Directors Officers Employees Elected Hired

18. Duties of Directors and Officers Duty to Act within Authority –Ratification Duty of Due Care and Diligence –Prudent Person Standard –Business Judgment Rule –The Business Judgment Rule in the Takeover Context –Deal Protection Devices –Legislative Responses to Increased Director Liability Charter Option Statutes Self-executing Statutes Cap on Monetary Damages Statute

19. Duties of Directors and Officers Duty of Loyalty and Good Faith –Self-Dealing –Usurping Corporate Opportunities –Freeze-Outs, Oppression, and Bad Faith –Trading on Inside Information Director’s Right to Dissent

20. Corporate Taxation Business Profit Tax Form 1120 (or Form 1120-A)Form 1120 Shareholder/Dividend Distribution Tax Avoiding Double Tax –Closely Held- Reasonable Officer Salary –Employee/Shareholder Expense Account –Capital Structure- Equity v. Debt –Accumulate Earnings- No Dividend –File Subchapter S

21. Corporate Characteristics LIABILITY –Limited for investors (unless corporation is a sham.) –Officers & directors may have some liability DURATION/CONTINUITY –Can outlive its creators/owners –Ownership can be sold subject to security laws & shareholder agreements

22. Corporate Characteristics ADVANTAGES –Practical means of bringing large number of investors together. –Limited liability for investors –Perpetual existence –Shareholders can also be employees

23. Corporate Characteristics DISADVANTAGES –Cost of forming & maintaining –License fees & franchise taxes –Double taxation –Must be qualified in all states where it is doing business –More government regulation

24. Organizational Form Hybrids S Corporations –Legal Characteristics Of Corporation –Can Elect To Be Taxed As Partnership Limited Liability Company –Nontaxable Entity –More Flexible Than S Corp. –Shareholders = “Members”

25. S Corporation Domestic Not a member of affiliated group Shareholders can be individuals, estate, & certain trusts 100 or fewer shareholders Only one class of stock No nonresident aliens

26. S Corporation Tax Form 1120s1120s

27. Historically, for tax purposes, an organization with at least 5 of the following characteristics was considered a CORPORATION Association of owners Carrying on business Continuity of life Separation of ownership & management Limited liability Free transferability of ownership interests

28. Starting in 1997, “check the box” rules became effective.

29. Limited Liability Companies Creation –Filing of articles of organization with secretary of state Legal Status –Separate entity Operation –Separate and distinct from members Transferability Dissolution

30. Limited Liability Partnerships Creating an LLP –File LLP form with the state Managing the LLP –Equal voice in management unless altered by agreement LLP Taxation –LLP pays no income tax –Partners report share of LLP’s profit on personal return

31. Which form of business organization should they use? Adam, Bonnie, and Carl want to open a Thai restaurant. –Adam has no money to invest, but he has a bartender’s license and was an assistant manager at a restaurant for 10 years. –Bonnie is a dentist who is looking for an investment.

32. Which form of business organization should they use? –Carl has $20,000 in savings. He can invest some, but needs the rest to send his daughter to cosmetology school. He has tried several business ventures in the past, but they have all been failures. He hopes this one will make it and he is counting on his best friend, Adam, to help him.

33. Which form of business organization should they use? Before forming their business, Adam and Carl learn that Bonnie has been performing some unauthorized procedures while her patients are anesthetized. She is now being hit with dozens of lawsuits. Should they consider different form of business entity?