MGTA01H3 Chapter 4: Chapter 4

• School: UTSC
• Department: Management (MGT)
• Course: MGTA01H3
• Professor: Chris Bovaird

Document Summary

Entrepreneurs must decide which form of legal ownership best suits their needs. 4 options are available: the sole proprietorship, the partnership, the corporation and the cooperative. Sole proprietorship: a business owned and operated by one person. Legally your business is considered to be an extension of yourself (and not a separate legal entity) Freedom may be the most important benefit of a sole proprietorship. Since business and the proprietor are legally one and the same, the losses in their early stages can be deducted from income the proprietor earns from personal sources other than the business therefore there are tax benefits. Unlimited liability: personal liability for all debts of the business. A sole proprietor depends on the resources of one person whose managerial and financial limitations may constrain the business. Partnership: a form of organization established when two or more persons agree to combine their financial, managerial and technical abilities for the purpose of operating a business for profit.