7.1. Business Structures

7.1. Business Structures & Terminology

UK vs. US Legal English

İpucu: Çeviri için altı çizili kelimelerin üzerine gelin (Mobilde tıklayın).

PART A: CONCEPT & TERMINOLOGY

1 Unincorporated Business Structures (Tüzel Kişiliği Olmayanlar)

• Sole Trader (UK) / Sole Proprietor (US) The simplest form of business owned and operated by one person. There is no legal distinction between the owner and the business. The owner has unlimited personal liability for all business debts.
• Partnership An association of two or more people to carry on a business for profit.

  • General Partnership: Partners share profits and have joint and several liability (unlimited) for debts.

  • Limited Partnership (LP): Consists of at least one general partner (unlimited) and one or more limited partners (liability limited to investment).

2 Incorporated Structures (Tüzel Kişiliği Olanlar)

• Limited Liability Company (UK - Ltd/Plc) In the UK, a "Company" is a separate legal person distinct from its members (shareholders). Shareholders have limited liability; they are not personally responsible for debts.
• Corporation (US - Inc./Corp.) In the US, the term for a separate legal entity is a "Corporation." It protects shareholders from personal liability (the "Corporate Veil").
• Limited Liability Partnership (LLP) Combines tax flexibility of a partnership with limited liability protection of a corporation.

UK vs. US Terminology

Category	UK	US
Documents	Memorandum + Articles of Association	Articles of Incorporation + Bylaws
People	Shareholder / Managing Director	Stockholder / CEO

PART B: INTERACTIVE EXERCISES

Exercise 1: Terminology Match Match UK (Left) to US (Right)

Articles of Association

-- Select US Equivalent -- Bylaws Articles of Incorporation Common Stock Annual Meeting Sole Proprietor

Memorandum of Association

-- Select US Equivalent -- Bylaws Articles of Incorporation Common Stock Annual Meeting Sole Proprietor

Ordinary Shares

-- Select US Equivalent -- Bylaws Articles of Incorporation Common Stock Annual Meeting Sole Proprietor

Annual General Meeting (AGM)

-- Select US Equivalent -- Bylaws Articles of Incorporation Common Stock Annual Meeting Sole Proprietor

Sole Trader

-- Select US Equivalent -- Bylaws Articles of Incorporation Common Stock Annual Meeting Sole Proprietor

Exercise 2: Liability Sorter

Does the owner have Unlimited Liability (Risky) or Limited Liability (Safe)?

1. Sole Proprietor

2. General Partner

3. Shareholder of a Corp

4. Limited Partner (LP)

5. Member of an LLP

Exercise 3: True or False

1. In the UK, a "Company" can refer to a simple partnership without a separate legal identity.

2. A Sole Proprietor in the US pays business income tax separately from their personal income tax.

Hint: Look for "flow-through" taxation.

3. "Lifting the Corporate Veil" means holding shareholders personally liable for corporate debts in cases of fraud.

4. In a Limited Partnership (LP), all partners have limited liability.

5. A US Corporation is governed by "Bylaws."

Exercise 4: Client Scenarios

1. Client A wants to start a small consultancy alone. She wants the simplest setup with no paperwork costs and doesn't mind personal risk.

a) C-Corporation b) Public Limited Company (Plc) c) Sole Proprietorship

2. Client B and C are lawyers. They want to work together but want protection so that if one partner commits malpractice, the other partner's personal assets are safe.

a) General Partnership b) Limited Liability Partnership (LLP) c) Sole Trader

3. You are reading a contract from New York. It refers to the "Articles of Incorporation." If this were a London-based contract, what document would it refer to?

a) The Bylaws b) The Memorandum of Association c) The Trust Deed

Exercise 5: Drafting Advice

legal entity | shareholders | liability | incorporation | dividends

"Dear Client, regarding your request to form a new business in London: I recommend forming a Private Limited Company (Ltd). Upon registration, the company becomes a separate (1) .

This is crucial because it limits your personal (2) to the amount you invest.

You and your partners will own the company as (3) .

Profits can be distributed to you as (4) .

The first step is to file the necessary documents for (5) with Companies House."

Exercise 1: 1-A (Bylaws), 2-B (Articles of Inc), 3-C (Common Stock), 4-D (Annual Meeting), 5-E (Sole Proprietor).

Exercise 2: Unlimited: Sole Proprietor, General Partner. Limited: Shareholder, Limited Partner, Member of LLP.

Exercise 3: 1. False, 2. False, 3. True, 4. False, 5. True.

Exercise 4: 1-c, 2-b, 3-b.

Exercise 5: 1. legal entity, 2. liability, 3. shareholders, 4. dividends, 5. incorporation.