ADMS 1000 Chapter Notes - Chapter 8: Sole Proprietorship, Double Taxation, Human Capital

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chocolatesea-lion294

3 Dec 2013

School

York University

Department

Administrative Studies

Course

ADMS 1000

Professor

Peter Khaiter

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ADMS 1000 Full Course Notes

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Have limited liability to obtain capital and the owner bears all debt and profit. Limited life span ( they die with the owner) Corporation are the dominate form of organization, it is a separate legal entities, does not die with the owner of the business. People can only lose what they put into the organization. Less than 20% of businesses are corporations but they account for 90% of all business revenues (in the us) Stockholders are the owners of public corporations. Advantages (relative to sole proprietorships and partnerships): Infinite life: access to capital ( sell stocks and bonds, limited liability, transferability and liquidity of ownership. The system by which business corporations are directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as, the board, managers, shareholders and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs.

Related Questions

Match Column A with Column B

1) Partnership	a) a business owned by one person who is personally liable for all losses
2) Proprietorship	b) An artificial being created by a state
3) Limited partnership	c) two or more persons combine their efforts for a single transaction
4) Corporation	d) created when shareholders elect to be treates as partners for tax purposes
5) legal capacity	e) created by an agreement between two or more persons who agree to share profits and losses
6) buy-and-sell agreement	f) provides for compensation to a deceased or withdrawing owner of a business in return for that owners interest.
7) Subchapter S corporation	g) the ability of an organization to sue or to own property
8) joint venture	h) exists when some partners are treated like shareholders for liability purposes
9) limited liability company	i) tax doctine that allows income to be taxed at the owner level, not the organization level
10) "pass through"	j) owners recieve limited liability and tax treatment as if they were a partnership without filing as a corporation.

30) 30) What is a disadvantage of a corporation relative to a sole proprietorship or partnership? A) Profits are taxed twice: as corporate profits and as dividend income and capital gains to stockholders. B) perpetual life C) dies with the owner D) Owners have unlimited liability. E) high cost of capital

Jane Doe, who has substantial personal wealth and income, is considering the possibility of starting a new business in the chemical waste management field. She will be the sole owner, and she has enough funds to finance the operation. The business will have a relatively high degree of risk, and it is expected that the firm will incur losses for the first few years. However, the prospects for growth and positive future income look good, and Jane plans to have the firm pay out all of its income as dividends to her once it is well established. Which of the legal forms of business organization would probably best suit her needs?
Answer

Proprietorship, because of ease of entry.

S corporation, to gain some tax advantages and also to obtain limited liability.

Partnership, but only if she needs additional capital.

Regular corporation, because of the limited liability.

In this situation, the various forms of organization seem equally desirable.

ADMS 1000 Chapter Notes - Chapter 8: Sole Proprietorship, Double Taxation, Human Capital

ADMS 1000 Full Course Notes

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