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MGM101H5 (376)
Chapter 4

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Department
Management
Course
MGM101H5
Professor
Dave Swanston
Semester
Fall

Description
Types of businesses Type of Definition Advantages Disadvantages business Sole a business that  Easy starting and ending  Unlimited liability proprietorship is owned and  Being your own boss  Limited financial resources 23.9% run by one  Pride of ownership  Management difficulties person (local  Keep company profit  Time commitment businesses)  No special tax  Few fringe benefits  Less gov’t regulations  Limited growth  Limited lifespan  High tax if income > 400000 Partnership a legal form of  More financial resources  Unlimited liability 4.4% business with o Pool capital  Division of profits two or more  Shared management, skills and  Disagreements among parties (legal knowledge partners firms) o Each partner has something  Difficult to terminate new to offer  Higher taxes if profitable General  Longer survival o If income is high, Partner: an  Shared risk they may pay owner  No special tax higher taxes than if (partner) who o Personal income, normal they were has unlimited income tax incorporated liability and  Less gov’t regulations manages the firm Limited Partner: An owner (partner) who invests money into the firm, doesn’t manage and limited liability (only what they invest) Corporation a legal entity  Limited liability  Extensive paper work 69.1% with authority  More money for investment  Double taxation to act and have o Selling shares  Two tax returns liability  Size o Corporate tax separate from o Large scope of things return its owners  Perpetual life o Individual tax (Walmart) o Death doesn’t terminate return Public corps: business  Size has the right to  Ease of ownership change o Slow against issue shares to  Ease of drawing talented employees market changes the public to be  Separation of ownership from o Inflexible listed on the  Difficulty of termination management stock exchange o Owners/stockholders don’t  Possible conflicts with Private corps: control daily operations stockholders and board of not allowed to directors issue shares,  High initial cost limited to 50 or less shareholders  Other types of corporations o Professional corps
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