LAW 122 Chapter Notes - Chapter 20: Sole Proprietorship, Legal Personality, Initial Public Offering
2 Feb 2020
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Chapter 20 - basic forms of business organizations. Sole proprietorship arises once a person begins to conduct business on their own. For ex, someone cutting someone else"s lawn for money would be a sole proprietor). As a sole proprietor, you could enter into a contract to employ someone else to cut your neighbour"s grass, but you remain the sole owner of the business and the only person responsible for its obligations. A sole proprietor cannot be an employee of the business because you cannot contract with yourself. For income tax purposes, the income or loss from the sole proprietorship is taxed in the hands of the sole proprietor. Importantly, with a sole proprietorship, there is no separation between the business and the proprietor (i. e. , the owner). As a result, the following characteristics apply to sole proprietorships: The proprietor is entitled to all income of the business; The proprietor is liable for all obligations of the business;
