Business Structures and Internal Governance

This chapter explains the legal structure of the entities that appear throughout REG tax and business-law questions. Understanding how entities differ in formation, governance, authority, and continuity makes later tax consequences easier to analyze.

In This Chapter

• Legal Characteristics of Sole Proprietorships, Partnerships, Corporations, and LLCs compares the defining traits of the major entity forms.
• Entity Formation, Operation, and Termination explains how entities begin, function, and end.
• Owner and Management Rights, Duties, and Authority covers control, agency, and responsibility inside each structure.
• Governing Documents, Internal Rules, and Compliance explains the documents and rules that support ongoing legal operation.

How to Use This Chapter

• Read this chapter before advanced entity-tax chapters if the legal structure is still fuzzy.
• Focus on which characteristics drive liability, authority, continuity, and administrative requirements.
• Revisit it whenever a REG question asks you to separate legal form from tax treatment.

In this section

• Legal Characteristics of Sole Proprietorships, Partnerships, Corporations, and LLCs
  How the major entity forms differ in liability, formation, governance, and tax posture.
• Entity Formation, Operation, and Termination
  How business entities are formed, operated, maintained, and dissolved.
• Owner and Management Rights, Duties, and Authority
  How owners, directors, managers, and partners allocate control and authority inside business entities.
• Governing Documents, Internal Rules, and Compliance
  Operating agreements, shareholder documents, recordkeeping, and compliance controls across entity forms.