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Final

Forms of Business ownership Includes advantages and disadvantages for sole proprietorship, public and private corporations, and partnerships. Need to know this for the final exam


Department
Business
Course Code
BU111
Professor
Jim Mc Cutcheon
Study Guide
Final

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November 1st, 2010
NEED TO BE ABLE TO COMPARE AND CONTRAST DIFFERENT FORMS OF
OWNERSHIP ON THE EXAM
Traditional Forms of Business Ownership
-sole proprietorship (74% of Canadian business, 9% sales)
-corporation (17% of Canadian business, 87% sales)
-partnership (9% of Canadian business, 4%)
Sole Proprietorship
Advantages
-easy to form and dissolve
-owner has sole claim on all profits
-high levels of personal incentive, freedom and satisfaction
-maximum levels of secrecy
-tax advantages
-government supports small businesses
Disadvantages
-unlimited liability
-difficulty in raising capital (banks reluctant to hand out loans)
-lack of continuity (if the owner dies, so does the business)
-management limitations
-taxation disadvantages
Partnerships
-incorporated business owned and operated by more than one person for their private profit
-always formed by agreement, either written or oral (written is the safest way though); partnership
agreement
-partnership agreement is a legal document that outlines all of the rights and responsibilities of the
partners
-designed to prevent future ill will and misunderstanding between partners
Contents of a Partnership agreement
-names of all partners
-type of partner (general/limited)
-initial financial contribution
-how profits are allocated
-process to be followed if adding or withdrawing a partner
Types of Partnerships:
-general
-unlimited liability is both joint
-several
-joint liability: all partners are equally liable for debts of the business
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