Intro to business Chapter 5

Sole proprietorship

a business that is owned (and usually operated) by one person

unlimited liaibility

a legal concept that holds a business owner personally responsible for all the debts of the business


a voluntary association of two or more persons to act as co-owners of a business for profit

General partner

a person who assumes full or shared responsibility for operating a business

Limited partner

a person who contributes capital to a business but has no management responsibility or liability for losses beyond the amount he or she invested in the partnership


an artificial person created by law with most of the legal rights of a real person, including the rights to start and operate a business, to buy or sell property, to borrow money, to sue or be sued, and to enter into binding contracts


the shares of ownership of a corporation


a person who owns a corporation's stock


a distribution of earnings to the stockholders of a corporation

Board of directors

the top governing body of a corporation, the members of which are elected by the stockholders

Limited liability

a feature of corporate ownership that limits each owner's financial liability to the amount of money that he or she has paid for the corporation's stock


a corporation that is taxed as though it were a partnership

LLC (Limited Liability company)

a form of business ownership that combines the benefits of a corporation and a partnership while avoiding some of the restrictions and disadvantages of those forms of ownership

Not-for-profit corporation

a corporation organized to provide a social, educational, religious, or other service rather than to earn a profit

Joint venture

an agreement between two or more groups to from a business entity in order to achieve a specific goal or to operate for a specific period of time


the purchase of one corporation by another

Horizontal mergers

a merger between firms that make and sell similar products or services in similar markets

Vertical merger

a merger between firms that operate at different but related levels in the production and marketing of a product