Chapter 6: Forms of Business Ownership 2012-09-28 5:59 AM
• What are the 3 forms of business ownership?
• Most people who start busin esses in Canada are sole proprietors. What are the advantages
and disadvantages of sole proprietorships?
• Why would unlimited liability be considered a major drawback of sole proprietorships?
• What is the difference between a limited partner and a general p artner?
• What are some of the advantages and disadvantages of partnerships?
• State 4 provisions usually included in a partnership agreement
• What are the major advantages and disadvantages of incorporating a business?
• What is the role of owners (stockholders ) in the corporate hierarchy?
• If you buy stock in a corporation and someone is injured by one of the corporation’s
products, can you be sued? Why or why not?
• What are some of the factors to consider before buying a franchise?
• What opportunities are availa ble for starting a global franchise?
• What is a co-operative?
Learning Objective #1: list the advantages and disadvantages of sole proprietorships
• The major forms of business o wnership are sole proprietorships, partnerships, and
• What are the advantages and disadvantages of sole proprietorships?
o The advantages of sole proprietorships include ease of starting and ending the
business, being your own boss, pride of ownership, retention of profits, no special
taxes, and less regulation than for corporations. The disadvantages include
unlimited liability, limited financial resources, difficulty in management,
overwhelming time commitment, few fringe benefits, limited growth, limited
lifespan and the possibility of paying higher taxes dependi ng on the level of
Learning Objective #2: describe the advantages and disadvantages of partnerships. Include the
differences between general and limited partners.
• The 3 key elements of a general partnership are common ownership, shared profits and
losses, and the right to participate in managing the operations of the business
• What are the main differences between general and limited partners?
o General partners are owners (partners) who have unlimited liability and are active
in managing the company. Limited partners are owners (partners) who have
limited liability and are not active in the company.
• What are the advantages and disadvantages of partnerships?
o The advantages include more financial resources, shared management and pooled
knowledge, longer survival and less regulation than for corporations. The
disadvantages are unlimited liability division of profits, possible disagreements
among partners, difficulty of termination, and the possibility of paying higher taxes
depending on the level of income
Learning Objective #3: discuss the advantages and disadvantages of corporations
• A corporation is a legal entity with authority to act and have liability separate from its
• What are the advantages and disadvantages of corporations?
o The advantages i