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Chapter 6

Chapter 6 – Forms of Business Ownership.docx

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Rita Cossa

thBusiness Textbook March 5 2012Chapter 6Forms of Business OwnershipStarting a Small Business One key success in starting a new business is understanding how to get the resources you needThere are 3 major forms of business ownership 1 Sole proprietorship 2 Partnerships 3 CorporationsSole proprietorship a business that is owned and operated by one person without forming a corporationThe business and the owner are a single entityAlmost 24 of all registered businesses in Canada fall under this form of ownershipPartnership A legal form of business with two or more partiesCorporation a legal entity with authority to act and have liability separate from its ownersHave the largest share of business revenueLiability for a business it includes the responsibility to pay all normal debts and to pay 1 Because of a court order 2 Because of law 3 For performance under a contract 4 For damages to a person or propertySole Proprietorship Advantagesbeing your own boss and setting your own hours as well all 1 Ease of starting and ending the businessAll you need is buy or lease the needed equipment and put up some announcements saying you are in businessTo stop you simply stop 2 Being your own boss3 Pride of ownership4 Retention of company profitYou can earn as much as possible and not have to share it with anyone except the government in taxes 5 No special taxesAll profits are taxed as the personal income of the ownerThey can also claim any business losses against other earned incomeThese losses would decrease the personal taxes they would need to pay 6 Less regulationAs well the administration of a proprietorship is less costly than that of a corporationDisadvantages 1 Unlimited liability the risk of personal lossesthe responsibility of business owners for all of the debts of the business 2 Limited financial resourcesFunds available to the business are limited to the funds that the one sole owner can gather 3 Management difficulties4 Overwhelming time commitment
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