AFM231 Chapter Notes - Chapter 14: Sole Proprietorship, Limited Liability Partnership, Limited Partnership

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM231
• Professor: Valerie B Irie

Document Summary

Choosing how to own a business: who is financially liable for the business, who shares in business profits and other assets, who makes and is accountable for management decisions. If the business falters, the owner"s business and personal assets are subject to the debts of the business. Judgment can be kept alive against the owner indefinitely unless they declare bankruptcy. If the business breaches a contract, the owner is in breach since the business can not enter into a contract: owner will be sued with their assets, unlimited liability: unrestricted legal responsibility for obligations. Sole proprietor also receives all profits after taxes. Sole proprietor has no partners or board of directors, can make business decisions quickly and independently. Includes discontinuing business activities: business is terminated when the owner dies, sole proprietor is responsible for every aspect of the business, adverse effects if the sole proprietor is absent, employees have limited opportunities for advancement.