Small Business Management-Chapter 8

Management team
Managers and other key persons who give a company its general direction.
Social network
An interconnected system comprising relationships with other people.
Social capital
The advantage created by an individual’s connections in a social network.
Reciprocation
A powerful social rule based on an ablation to repay in kind what another has done for or provided to us.
Sole proprietorship
A business owned by one person, who bears unlimited liability for the enterprise.
Unlimited liability
Liability on the part of an owner that extends beyond the owner’s investment in the business.
Partnership
A legal entity formed by two or more co-owners to carry on a business for profit.
Partnership agreement
A document that states explicitly the rights and duties of partners.
Joint and several liability
The liability of each partner resulting from any one partner’s ability to legally bind the other partners.
Corporation
A business organization that exists as a legal entity and provides limited liability to its owners.
Legal entity
A business organization that is recognized by the law as having a separate legal existence.
C corporation
An ordinary corporation, taxed by the federal government as a separate legal entity.
Corporate charter
A document that establishes a corporation’s existence.
Stock certificate
A document specifying the number of shares owned by a stockholder.
Pre-emptive right
The right of stockholders to buy new shares of stock before they are offered to the public.
Piercing the corporate veil
A situation in which the courts conclude that incorporation has been used to perpetuate a fraud, skirt a law, or commit some wrongful act, and thus remove liability protections from the corporate entity.
Limited partnership
A partnership with at least one general partner and one or more limited partners.
General partner
A partner in a limited partnership who has unlimited personal liability.
Limited partner
A partner in a limited partnership who is not active in its management and has limited personal liability.
S corporation (Subchapter S Corporation)
A type of corporation that offers limited liability to its owners but is taxed by the federal government as a partnership.
Limited liability company
A form of organization in which owners have limited liability but pay personal income taxes on business profits.
Professional corporation
A form of corporation that shields owners from liability and is set up for individuals in certain professional practices.
Nonprofit corporation
A form of corporation for enterprises established to serve civic, educational, charitable, or religious purposes but not for generation of profits.
Organizational test
Verification of whether a nonprofit organization is staying true to its stated purpose.
Strategic alliances
An organizational relationship that links two or more independent business entities in a common endeavor.
Board of directors
The governing body of a corporation, elected by the stockholders.
Advisory council
A group that functions like a board of directors but acts only in an advisory capacity.