Management and Organizational Studies 2275A/B Chapter Notes - Chapter 14: Net Income, Tax Avoidance, Profit Motive

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 2275A/B
• Professor: Philip King

Document Summary

Choosing how to own business is critical decisions b/c it determines who: Is financially liable for business: shares in business profits and other assets, makes and is accountable for management decisions. Sole proprietorship: unincorporated business organization that has only 1 owner: simplest form of business organization. Simplicity: few licensing/registration requirements, sole proprietor can start and discontinue business activities at any time. Speed and independence: sole proprietor has no partners/board of directors to answer to, make decisions quickly and independently. Profit motive: all after-tax profit/other assets go entirely to sole proprietor. Lower costs: no need to incur legal fees, fees for provincial and municipal licenses relatively small. Tax benefits: profits and losses reported on owner"s. Unlimited personal liability: sole proprietor carries risk of business failing and losing personal and business assets. Working alone: sole proprietor responsible for all aspects of business operations, difficult to retain high-caliber employees b/c of limited opportunities available.