Textbook Notes (367,754)
Canada (161,370)
MGTA01H3 (583)
Chapter 4

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Department
Management (MGT)
Course
MGTA01H3
Professor
Chris Bovaird
Semester
Fall

Description
Forms of Business Organisations:  Economic system is any given way a company/country/culture organizes/controls etc etc the Factors of production  Canada = market economy  Coz there is HIGH GDP rate and low unemployment = economy is doing well  The three main ways that companies are set up 1. Sole proprietorship 2. Partnership 3. Corporation *there are others but they are less common Sole Proprietorship  Easiest way  Most common  Business owned and operated by 1 person  he/she makes all decisions  puts in all the initial funding  keeps all the profits  pays all the bills and is responsible for all the debt  Can have people working for them  No regulatory setup costs  No mandatory accounting needs  Don’t really need to register it  Registering is NOT trademarking, it acknowledges the name of your company and no one else can pretend to be you  IF you don’t register and if someone with the same name company registers then you may be asked to stop using the name and then you have to  ^thus easier to start up  you are obliged to pay tax after you start earning a certain amount of money  it is moral/ethical/legal obligation Disadvantages  limits the owners skills  limits owners resources  harder to get finance  personal liability o possibility of getting sued o YOU (owner) is personally responsible o If things go wrong you are screwed  Unlimited liability o Personal liability = unlimited o Could loose everything in paying back lawsuits   Partnerships  Business owned/operated by two or more people acting together  No legal forms no payments etc etc  You just do it  Advantages  2 heads are better than one  easier to make decisions  more resources o human and financial  more credibility o banks will be more willing to give you more money  More contacts  Disadvantages  Conflict o Partners start fighting = BAD  Beginning/initial optimism doesn’t work out in the later time  Personal liability o Both/all partners are liable  Unlimited liability  Joint/several liability o Each partner responsible for the debts of partnership even if it was incurred by another partner  Partnership agreements  Easy to set up  Agreement between all the partners
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