ADMS 1000 Lecture Notes - Lecture 5: Double Taxation, Food Bank, Good Governance
16 Oct 2018
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Course
Professor
Lecture 5: Corporations and Non-Profit Organizations
Corporate governance
- Sole proprietorship
o Owned by one person
o No legal distinction between business and owner
o Advantages: profit goes to you, one decision maker, don’t have to go to diff
levels of management
o Disadvantages: harder to secure capital by yourself, unlimited liability; big risk
(sued personally), constantly working
- Partnerships
o General: run the business together
o Limited: more investors coming in
o Advantages: limited partnership, easy to make money,
o Disadvantages: unlimited liability (two people) → also can sue personal assets,
if one partner dies → partnership ‘dies’, silent partner (limited partners in the
background)
- Cooperative
o Corporation’s: owners are not employees
o By its members for its members
▪ Owner also an employee can contribute
o Common types of cooperatives
▪ Daily; runs the business but also working in the business
▪ Retail; home hardware
▪ Housing; makes expensive houses affordable
Corporation; owned by shareholders (investors) → allows the purchase of stocks
- 50 shares → 50 votes
- if sued; can’t attack owner directly
- publicly held organization
public vs private corporation
- public; you can’t purchase, public you can
- advantages:
o limited liability; owners aren’t held responsible
o permanency; any of the owners die, business will continue
o transferability of ownership; anything happened to you, share will be
transferred
o access to capital; easier to raise, much larger
- disadvantages:
o start up costs and disclosure issues; high, when you don’t what’s going on
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