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What is it called when Shareholders do not have to pay the debts of the corporation?
Wiki User
∙ 13y ago
limited liability
Wiki User
∙ 13y ago
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What legal doctrine protects individual shareholders of a corporation from having to pay off all debts of a failed business?
limited liability
When a business owner dies who is responsible for the debt?
If it is a sole proprietorship, then the estate will have to pay the debts. If it is a corporation, and the "owner" held all of the stock, then the corporation will have to pay all the debts.
How does double taxation of a corporate income occur?
Income to the corporation, as a legal "person", is taxable against the corporation. When the treasury pays dividends from its income to its shareholders, the dividend is taxable again as "income" to the shareholders. A "subchapter S-corporation" avoids this by skipping the corporate taxes and directly taxing the shareholders for any corporate income.
If a corporation fails where does the money come from to pay its debts?
All of a corporation's assets may be sold to satisfy debts, but this may not be sufficient to pay all claims and liabilities when a business becomes insolvent.
What is the meaning of corporate insolvency?
The definition of corporate insolvency is the inability to pay debts. It occurs when the business or corporation does not have sufficient funds to pay off its debts.
What is a share capital?
This is the sum of money the shareholders pay into which is called the share capital This is the sum of money the shareholders pay into which is called the share capital
What is a Legal letter to pay back money owed called?
A legal letter to pay back money owed is called a collection letter. It is better to have a collection letter come from a corporation that collects debts or an attorney. However, you can also write one yourself.
What is the legally bound obligation to pay debts called?
The legal obligation of a business to pay a debt is called an:
What is the number one reason why consumers default on their debts?
They do not have the money to pay back their debts!They do not have the money to pay back their debts!They do not have the money to pay back their debts!They do not have the money to pay back their debts!
What is a person called who is unable to pay their debts?
They are called a debtor, and they are often bankrupt.
What is the Importance of liquidity ratio to shareholders?
liquidity ratio's are important to shareholders because in a way the ratio's show them if the business is worth investing in. if a business has bad liquidity ratios because they ant payy off their debts, people are less likely to invest because they have they don't wnat to pay off other people debts. the ratio that shareholders are really interest in is return on capital employed because it shows how the net profit is distributed.
When a person a legal declaration of the inability to pay debts it is called?
mean test
