Legal exposure in which an owner of a business is personally liable for all of the debts and obligations of the business.
Partnership
A business owned and operated by two or more persons.
Winding-up period
The time after dissolution of a partnership during which there is an orderly liquidation of the partnership assets.
Joint venture
An activity in which individuals become partners for only a short period of time or for only a single project.
Joint and several liability
Legal exposure such that a person with a claim against a general partnership can elect to sue either all of the partners together or any individual partner whom he or she chooses.
Limited partnership
A business in which there are one or more general partners and one or more limited partners.
Limited liability
Legal exposure in which an owner of a business is not personally liable for all of the debt and obligations of the business.
Corporation
A business formed as a separate legal entity.
Articles of incorporation
A document that lists the general powers of a corporation.
Bylaws
A document that provides rules for the meetings of a corporation.
Quorum
The minimum number of shares necessary to present at a corporate meeting in order for action to be taken.
Subchapter S corporation
A corporation that is taxed as a partnership.
Proxy
A legal document that transfers the right to vote in a corporate election to another person.
Fiduciary responsiblity
A legal requirement that a person will exercise his or her authority while working under a duty of loyalty and a duty of care.
Duty of loyalty
A legal and ethical obligation placed upon a director to administer to the affairs of the corporation which personal integrity, honesty, and candor.
Duty of care
A legal and ethical obligation placed upon a director to act diligently and prudently in conducting the affairs of the corporation.
Limited liability company (LLC)
A relatively new organizational form available in most states that provides all of the owners with limited liability.