1. Forms of Business Organizations and Ownership Business Management 12 Stewart

2. Sole Proprietorship Business owned and operated by one person Solely responsible for profits or debts Very common in Canadian economy Ie. Small local business

3. Advantages Own boss Confidentiality Any others?

4. Disadvantages Unlimited personal liability - proprietor’s personal assets can be seized to pay outstanding debts No one else to rely on for funds/run business Difficult & expensive to obtain loans Progressive income tax ( income = tax)

5. The Partnership Owned by 2 or more Bound by a partnership agreement -no one set form -outlines rights and responsibilities General Partnership -All partners participate in management -Unlimited personal liability for business losses

6. The Partnership Limited partnership -limited partners -at least one general partner -Not permitted to take part in management -Personally liable for debts only up to their initial investment -No additional personal assets can be seized Ie. Law firm, architects, accountants

7. Advantages Pooling of talent & capital Personal motivation & satisfaction Attracts capital Obtaining credit is easier & interest rate

8. Disadvantages Progressive income tax Not easy to sell shares (approval) Right to retire (no new partner) Investment funds only from within (personal savings/mortgages) Disputes Legally terminates due to death, mental incapacitation, financially insolvent, breach of partnership

9. Advantage or Disadvantage? Unlimited personal liability Joint liability – all partners liable for debts Several liability – partner doesn’t pay? All other partners must pay debt

10. The Corporation Public (shares traded freely) or private (shares traded only with approval) Established ONLY with gov’t authorization Shares = corporate assets, equal Sold – stockbroker, stock market Owners – shareholder (few – 1000’s) = $$$ Oldest – Hudson’s Bay Company

11. Advantages Profit distribution Re-invest into firm = self financing = $ Dividends –$ not reinvested shareholders - per share basis, Preferred, Common Obligations responsibility of corp Limited personal liability (investment) investors = large scale Shares transfer Lower income tax

12. Disadvantages Gov’t fee much Closely regulated by gov’t - books (all aspects), annual meetings, financial statements & tax returns  Privacy? (competition)  control

13. The Government Enterprise Owned by federal, provincial or municipal Provide services that are costly Set up to standardize services & jobs Crown corporations – gov’t not person holds all/most shares Ie. Canada Post, the CBC, Via Rail, Hydro One (ON)

14. Not for Profit Refers to an organization that uses surplus revenues to achieve its goals, rather than distributing them as profit Not-for-profit organizations are permitted to generate surplus revenues they must be retained by the organization for its self- preservation, expansion, or plans.