Class Notes (1,100,000)
CA (620,000)
UTSC (30,000)
MGT (300)
MGTA01H3 (400)
Lecture

Lecture 4


Department
Management (MGT)
Course Code
MGTA01H3
Professor
Chris Bovaird

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LECTURE 4: TYPES OF ORGANIZATIONS
Sole proprietorship
-Many of us are already proprietors
-A business owned and operated by a single person
-The business is really an extent of you
-If the business is failing, costs growing or revenues shrinking then the person has to pay the
debts
-Cannot hide behind the proprietorship
-It is easy to set up + cheap
-Accounting aspects that need to set up before the business is started
-HST /sales taxes Ontario moved to the harmonized sales tax
-Getting a HST number is required
-Companies have to charge HST on all applicable goods and services and then remit those to
the government
-Disadvantages limits resourcefulness + skills
-Banks dont take risks: they make money on the transfer of money
-Dont have pools money sitting there
-Hard to get finances
-Two methods of financing 1) wealthy relative 2) the bank
- lends you money when you have an asset (Collateral) as part of the condition on debt
default
-If not in a position to get a mortgage, you develop a good credit rating
-Start with what they give you and have track record of risk
-A personal visa card used well, the bank will increase the limit
- Advantages
-More resources
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-Two or more people have complementary skills and interests
-Personal liability
Partnership
-Disadvantages
-Personal liability but still the person and the company are one
-Unlimited liability
-Joint and separate liability
-Each person is responsible for the debt and the partnership
-Each person affects the other
-The partnership can change and evolve over time
-Partners have to be honest for the sake of the partnership
Partnership agreements
-Partners have to sign off on everything
-Limited partnership
-General partners who own and manage the firm
-Can bring on other partners as limited partners
-Dont operate the firm
-Some combination of general and limited partners
-Their liability limited by their investment in the firm
-General partners often have unlimited liability
Corporations
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