MGTA01H3 Chapter Notes - Chapter 4: Legal Personality, Sole Proprietorship, Limited Liability
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MGTA01H3 Full Course Notes
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Document Summary
There are four options of legal ownership: sole proprietorship, partnership, corporation and the cooperative. Sole proprietorship: a business owned and operated by one person. Legally if a business if a sole proprietorship, then the business is considered to be an extension of the owner, and not a separate legal entity as in accounting. Freedom do not have to answer to anyone but yourself. Easy to form do not need to register your business name hence low start-up costs. Tax benefits since the business and proprietorship are legally one, the losses that business suffer in early stages can be from income the proprietor earned from personal sources rather than the business. Unlimited liability personal liability for all the debts and legal liabilities incurred by the business. Lack of continuity legally dissolves when the owner died. Depends on the resources of one person whose managerial and financial limitations can constrain the business, obtaining start-up capital is difficult.
