MGTA01H3 Lecture Notes - Lecture 7: Sole Proprietorship, Limited Liability, General Partnership

56 views5 pages
25 Nov 2013
School
Course
Professor

For unlimited access to Class Notes, a Class+ subscription is required.

Lecture 7 Oct 28, 2013
3 Main Forms of Ownership
In Canada, 3 common forms
1. Sole Proprietorship
2. Partnership
3. Corporation
There are others (much less common)
Sole Proprietorship
Easiest way to form a business
Most common form of ownership
Some of you are sole proprietors
Examples…
A business owned by 1 person (but not necessarily that
Sole proprietor:
supplies all the capital
makes all decisions
keeps all profits
responsible for all debts
Business owned by 1 person
Sole proprietor can have employees.
(can have many employees)
But ultimately there’s just one boss
Sole Proprietorship Advantages
Easy to set up:
No regulatory requirements
No mandatory accounting needs
Cheap to set up:
$60 - $70 if registered / $0 if not Does not need to be registered
Management / ownership clear
Sole Proprietorship - Disadvantages
Limits to owner’s skills
Limits to owner’s resources
Hard to get finance (bank loans)
Personal liability
Unlimited liability
Unlock document

This preview shows pages 1-2 of the document.
Unlock all 5 pages and 3 million more documents.

Already have an account? Log in
“Personal” Liability
Because and your business are one and the same:
You are personally responsible
to pay any bills, settle any law- suits, and pick up all the pieces…
If things go wrong!
“Unlimited” Liability
How much you might have to pay is unlimited.
Your financial responsibility:
Not limited to value of the job.
Not limited to value of assets used on job
If things go wrong, you can be sued for $$$
You could lose your house, car, life savings
Partnership
A Business owned / operated by 2 or more people acting together
Examples…
Partnership Advantages
Two (or 3) heads better than one
More resources
(human and financial)
More credibility
(more than 1owner)
More contacts
(potential customers)
Partnership Disadvantages
Conflict (more than 1owner)
Personal liability
Unlimited liability
Joint and several liability
each partner responsible for debts of partnership, even when
incurred by another partner.
Partnership Agreements
Agreement between partners
Unlock document

This preview shows pages 1-2 of the document.
Unlock all 5 pages and 3 million more documents.

Already have an account? Log in

Get access

Grade+
$10 USD/m
Billed $120 USD annually
Homework Help
Class Notes
Textbook Notes
40 Verified Answers
Study Guides
1 Booster Class
Class+
$8 USD/m
Billed $96 USD annually
Homework Help
Class Notes
Textbook Notes
30 Verified Answers
Study Guides
1 Booster Class