BUSI 1600U Lecture Notes - Lecture 6: Sole Proprietorship, Limited Liability, Corporate Tax
16 Jan 2016
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Sole proprietorship: one person owning and operating a business, without forming a corporation, in a sole proprietorship, the business and the owner are a single entity. Advantages: ease of start/end, be your own boss, pride of ownership, leave legacy, retain profit, no special taxes, fewer regulations. Liability: liability is often just another word for debt, but it also has a wider and important meaning, for a business, it includes the responsibility to pay all normal debts. Unlimited liability: when you work for others, it is their problem if the business is not profitable, when you own your own business, you and the business are considered one. You have unlimited liability; that is, any debts or damages incurred by the business are your debts, and you must pay them: when you have a sole proprietorship, you have unlimited liability. Disadvantages: unlimited liability, limited financial resources, difficulty in mgmt, time commitment, few fringe benefits, limited growth, limited life span.
