10.8 Key Terms
B corporation
business that meets a very high standard of social and environmental performance, public transparency, and accountability to balance profit with social purpose
business purpose
reason the entrepreneur forms the company and determines who benefits from it, whether it is the entrepreneur, customers, or some other entity
business structure
legal organization of a business; also called entity selection
C corporation
corporation taxed the corporate level, and then again on the owners’ personal income tax returns if corporate income is distributed to the shareholders as dividends
capital
money raised for operating a business
corporation
complex business structure created by filing the appropriate documents with the state of incorporation
economic nexus
virtual connection with a state based on sales volume or number of transactions
enterprise risk management
integrated cross-disciplinary approach to monitoring risk
equity crowdfunding
raising of capital through the online sale of securities to the general public
financial risk
starting a new business with insufficient funds to sustain operations over an extended period of time
for-profit business
business structure designed to create profits that are distributed to the owners
general partnership
business created when two or more individuals or entities agree to work together to operate a business for profit
insurance
spreading risk over a large number of people (policyholders)
joint venture
temporary partnership in which two different enterprises combine for the purpose of mutual benefits such as sharing of expenses and to work toward shared goals and the associated potential revenue
legal risk
risk stemming primarily from a breach of contract, a regulatory violation, and/or the commission of a tort
limited liability company (LLC)
hybrid of a corporation and a partnership that limits the owner’s liability
limited liability partnership (LLP)
business arrangement for professional partnerships, such as law firms or accounting firms, in which partners are licensed professionals, with limited liability for financial obligations related to contracts or torts, but full liability for their own personal malpractice
limited partnership (LP)
business arrangement that has at least one general partner and one or more limited partners
not-for-profit organization (NFPO)
business structure that is usually dedicated to furthering a particular social cause or for advocacy related to a common shared interest by using its surplus revenues to achieve its ultimate objective
partnership
business entity formed by two or more individuals, or partners, each of whom contributes something such as capital, equipment, or skills
privately held corporation
company that does not allow members of the investing public to own stock; instead, it is owned by the founder’s family or friends, or a private group of investors
public corporation
quasi-governmental entity, a corporation owned or sponsored by the government
publicly held corporation
entity in which members of the investing public own the stock
S corporation
“pass-through” entity, also known as a small corporation, where shareholders report and claim the business’s profits as their own and pay personal income taxes on it
sole proprietorship
business entity that is owned and managed by one individual that has very little formal structure and no mandatory filing/registration with the state