Textbook Notes (368,434)
Canada (161,878)
Management (865)
MGM101H5 (376)
Chapter 4

Chapter 4 Notes.docx

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Dave Swanston

Chapter 4 Notes – Types of Businesses - Sole Proprietorship; business owned and operated by one person, without forming corporation o Business and owner are single entity o Advantages  Own boss  Ease of starting and ending business  Pride of ownership  Retention of company profit (keep all profits)  No special taxes (taxed as personal income of owner)  Less regulation o Disadvantages  Unlimited Liability; responsibility of business owners for all debts of business  Limited financial resources  Management issues  Limited growth  - Partnership; legal form of business with two or more parties - General Partnership; all owners share in opening business and assume liability for business debts - Limited Partnership; with one or more general partners and one or more limited partners - General Partner; owner (partner) who has unlimited liability and is active in managing firm - Limited Partner; owner who invests money in business but does not have management responsibility or liability for losses beyond investment o Advantages  More financial resources  Shared management/knowledge and skills  Longer survival  Shared risk  No special tax  Less regulation o Disadvantages  Unlimited liability  Shared profits  Disagreement - Corporation; legal entity with authority to act and have liability separate from owners - Public Corporation; issues shares to public, listed on stock exchange - Private Corporation; no shares in public, not listed on stock exchange, limited to 50 or fewer shareholders o Advantages  Limited liability  More money for investments  Perpetual life  Ease of ownership change o Disadvantages  Paperwork  Double taxation  Two tax returns  Difficulty of termination - Professional Corporation o Canadian controlled, private o Provides professional service o Ex. Accountants, Architects, Lawyers, Physicians, & Dentists - Non-Resident Corporation o Conduct business in Canada but HQ elsewhere. Ex. Airlines - Non-Profit Corporations o Charitable or social benefits o No income tax o No issued shares - Liability; responsibilities to pay all normal debts - Corporate Governance; process and policies that determine how organization interacts with stakeholder, internal a
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