Ch. 6 study guide

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University of Toronto Mississauga
Cant Remember

Ch. 6 -3 major forms of business ownership are (1) sole proprietorship, (2) partnerships, and (3) corporations. (1) A sole proprietorship is a business that is owned and is usually managed by one person (2) a partnership is when two or more people agree to become co-owners of a business, the organization is called a partnership (3)A corporation is a legal entity with authority to act and have liability separate from its owners -Liability: For a business, it includes the responsibility to pay all normal debts and to pay because of a court order or law, for performance under a contract, or payment of damages, to a person or property in an accident. -Sole Proprietorship: Advantages Disadvantages Ease of starting and ending the business. All Unlimited liabilitythe risk of personal you have to do to start a sole proprietorship losses. When you work for others, it is their is buy or lease the needed equipment (e.g., a problem if the business is not profitable. saw, a word processor, a tractor, a lawn When you own your own business, you and mower) and put up some announcements the business are considered one. You have saying you are in business. It is just as easy unlimited liability; that is, any debts or to get out of business; you simply stop. There damages incurred by the business are your is no one to consult or to disagree with about debts and you must pay them, even if it such decisions. You may have to get a permit means selling your home, your car, or or licence from the local government, but whatever else you own. This is a serious often that is no problem. risk, and one that requires not only thought but also discussion with a lawyer, an insurance agent, an accountant, and others. Being your own boss. As noted earlier, this is Limited financial resources. Funds available one of the most common reasons cited for to the business are limited to the funds that starting a sole proprietorship. Working for the one (sole) owner can gather. Since there others simply does not have the same are serious limits to how much money one excitement as working for yourselfat least, person can raise, partnerships and thats the way sole proprietors feel. You may corporations have a greater probability of make mistakes, but they are your mistakes obtaining the needed financial backing to and so are the many small victories start a business and keep it going. encountered each day. Pride of ownership. People who own and Management difficulties. All businesses need manage their own businesses are rightfully management; that is, someone must keep proud of their work. They deserve all the inventory records, accounting records, tax
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