Business Law I
March 4, 2013
Outside of a sole proprietorship, where a single owner owns and operates the business there are three basic types of business organizations: partnership, corporation and LLC, also known as limited liability company. (Rodgers, S. 2010. Chapter 13) The general requirements for each entity are the following; a partnership is defined as an association of two or more competent persons to carry on a business as co-owners for profit. (Rodgers, S. 2010. Section 13.1) According to the law, competent means that the partners must have contractual capacity as well as each partner is simultaneously both a principle and an agent. Partners are also automatically owners and managers and by law this presumes equal rights unless the partners have specified otherwise. (Rodgers, S. 2010. Section 13.1) There must also be the intent to make a profit, there is no such thing as a nonprofit partnership.
The other business organization is the corporation. The corporation is very much like limited partnerships and does not exist at common law; it is a form of business organization that owes its existence to statues in all states that provide guidelines for its creation and management. (Rodgers, S. 2010. Section 13.2) However, unlike a partnership, the corporation is a legal entity in the eyes of the law. As an entity, a corporation enjoys most of the privileges and shares in most of the responsibilities of natural persons; it can avail itself of most constitutional protections offered to natural persons and can own property in its own name, but must pay taxes and is subject to civil and some criminal penalties for acts it performs through its agents. (Rodgers, S. 2010. Section 13.2) The Corporation is governed primarily by the statutory guidelines of the state statute that provides for its creation.
The last of the three business organizations is the LLC or limited liability