MGSC30H3 Lecture Notes - Lecture 2: Sole Proprietorship, Investment, Fiduciary
Document Summary
Topic: chapter 21 basic forms of business organizations. Comes into existence when person starts to carry on business on their own (ie. cut neighbour"s grass for money each week) Only one owner in business this person responsible for all its obligations. * responsible to perform all contracts entered into. * exclusively responsible for all torts committed personally in connection with business (and all torts committed by employees) * income is calculated in sole proprietor"s personal tax liability. Advantage: easy to set up, easy to dissolve. Disadvantage: unlimited personal liability (meaning third parties may take all sole proprietor"s personal assets to satisfy the business"s obligations) * raising money is difficult (business needs investment to grow) only financing is sole proprietor to borrow money directly (only 1 method to acquire money) * because of these 2 disadvantages, sole proprietorships are used only for relatively small businesses.
