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MGTA01H3 (348)

Textbook notes Ch.4-Legal Forms of Business Organisation

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University of Toronto Scarborough
Management (MGT)
Chris Bovaird

Chapter 4 0J,O472841:8L3088 7J,3L8,9L43 Forms of business organization - sole proprietorship - cooperative - partnership -income trust - corporation Introduction N Canada is free market economy. N Generally, entrepreneurs have NO obligation to ask govt. permission to establish new business. N Generally: no fees payable, no forms to fill in. N At simplest: to start a new business, just.... begin Choice of form of organisation determines: N Ownership N Division of authority N Distribution of profits (if any!) N Liability (if things go wrong!) Sole Proprietorship :8L30884Z30,34507,90-430507843ZK4L8507843,OO7085438L-O01479K0-:8L3088 debts [extension of yourself] N Easiest form of business organisation N Most common form of business ownership N No formalities are required [ no need to file anything ect] N Registration of business name is desirable N No legal requirements or costs N Tax losses can be offset against other income N Accounts for only a small proportion of total business revenue Advantages Disadvantages N Freedom N Personal liability N Easy to form (no need to register if N Unlimited liability: personal liability using your own name) for all debts and liability of the N Quick business N Cheap (free) N Lack of continuity N Depends on the resources of one N Simplicity of legal setup N Low start up cost person whose managerial and N Tax benefits financial limitations may constrain the business N Hard to borrow money
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