Chapter 3 & 4 Lecture

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University of Toronto Scarborough
Management (MGT)
Ingrid L.Stefanovic

Chapter 3. ppt 01 Laurence, Hugh MGTA04, Lec. 03 Forms of Business Organization in Canada Partnerships, Corporations and Strategic Alliances o Sole proprietorship o One person carries on a business o No formalities are required o Registration of business name desirable o No legal requirements or costs o Tax losses can be offset against other income o Drawbacks Unlimited liability of proprietor for debts and liabilities of the business No continuity what happens when the owner dies Depends on resources of the proprietor, and raising money can be difficult o Partnerships o A partnership is formed when: Two or more persons Carry on business together With a view to profit o Partners Involved directly in the business and make business decisions themselves Share in the profits o Advantages Tax losses flow through to the partners Law, accounting can only be practiced in partnerships in Ontario o Disadvantages Unlimited liability of partners for the debts and liabilities of the partnership business Dealing with new and retiring partners Limited partnerships allow investors some protection and give advantage of tax loss flow throughs o Limited Partnership At least one general partner N Has unlimited liability N Manages the business Several limited partners N Passive investors in the business N Liability limited to investment N Must not manage the business Used if business has high losses at start of business N Multiple residential units N Oil and gas exploration
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