AOA

Flexibility is allowed to the persons who form the company to adopt the AOA within the requirements of the company law The AOA will have to be conversant with the MOA, as they are contemporaneous documents to be read together. Any ambiguity and uncertainty in one of them may be removed by reference to the other.

FORMS OF BUSINESS ORGANIZATION

DEFINITIONS
Sole Proprietorship General Partnership Corporation

Any Business Owned and Operated by an Individual

Two or More Persons Operating a Business for a Profit

Legislatively Created and Regulated Governance, Ownership and Financial Structure

FORMS OF BUSINESS ORGANIZATION

GOVERNING DOCUMENTS
Sole Proprietorship General Partnership Corporation

None Required

None Required; Most have Agreement specifying Rights, Duties and Obligations

Articles of Incorporation create Corporation; Bylaws prescribe its Operation

FORMS OF BUSINESS ORGANIZATION

FORMATION
Sole Proprietorship General Partnership Corporation

No Formalities or Legal Documentation; May be Implied from Conduct or Actions

Filing of Articles Written or Oral of Incorporation Agreement or with Secretary of May be Implied State and from Conduct or Payment of Actions Fees

FORMS OF BUSINESS ORGANIZATION

NATURE OF OWNERSHIP
General Partnership Sole Proprietorship
Corporation

For Contribution, Partner receives Wholly Owned Proportionate Share by Single of Profits/Losses Individual and Partnership Property

Residual Claim on Corporate Equity and Right to Vote for Directors and Essential Governance

FORMS OF BUSINESS ORGANIZATION

LIABILITY
Sole Proprietorship General Partnership Corporation

Sole Proprietor Personally Liable for All Debts and Obligations

Partners are Jointly and Severally Liable for all Partnership Obligations, in Contract and in Tort

Shareholders Liability limited to Extent of Capital Contribution [Limited Liability]

FORMS OF BUSINESS ORGANIZATION

TAXATION
Sole Proprietorship General Partnership Corporation

Not a Taxable Entity; Income (Loss) passes through to Sole Proprietor

Partnership not a Taxable Entity; Allocations of Income and Loss allowed within Partnership before Pass-Through

Corporation taxed as Separate Entity and Dividends/Capital Gains also Taxed [Double Taxation]

FORMS OF BUSINESS ORGANIZATION

MANAGEMENT
Sole Proprietorship General Partnership Corporation

Sole Proprietor has Complete Management Control

All Partners have Equal Rights in Partnerships Management and Conduct

Managed by Board of Directors elected by Shareholders; Board may Delegate Authority to Appointed Officers

FORMS OF BUSINESS ORGANIZATION

Sole Proprietorship General Partnership

TRANSFER OWNERSHIP INTERESTS

Corporation

Sole Proprietorship not Limited Right of Transferable; Transfer subject Property and to Consent by all Products are Partners Transferable

Freely Transferable through Formal) and Informal (Private Equity) Capital Markets

FORMS OF BUSINESS ORGANIZATION

WITHDRAWAL OF OWNER
General Partnership Sole Proprietorship Corporation

Terminates Sole Proprietorship

Partner Death or Withdrawal may Terminate Partnership

Corporation has Unlimited Life

FORMS OF BUSINESS ORGANIZATION

Limited Partnership Limited Liability Corporation (LLC)

SPECIAL PURPOSE ENTITIES

Subchapter S Corporation

General Partner (Manager with Hybrid with Identical to C Unlimited Corporate Liability Corporation except Liability) and Protections and Right to Elect Limited Partner Partnership Tax Income/Losses (Investors with Treatment Pass-Through Limited Liability)

Trusts and Societies

A corporation established for charitable, public, religious purposes or for mutual benefit as recognized by federal and state laws. Advantages: Attractive to corporate donors for business expense deductions Can seek cash and in-kind contributions of equipment, supplies, personnel Can apply for grants from government-private agencies May qualify for tax-exempt status

Trusts and Societies

Disadvantages: Profits cannot be distributed as dividends Corporate money cannot be contributed to political campaigns or for lobbying Entrepreneur gives up proprietary interest in the corporation Upon dissolution, all assets must transfer to another tax-exempt nonprofit organization Substantial profits must come only from related activities It must pay taxes on profits