ADM 1301: The Social Context of Business - ADM 1301 The Social Context of Business Lecture#2 Chapter 1 September 12th The Canadian Private Sector Forms

ADM 1301: The Social Context of Business - ADM 1301 The...

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ADM 1301: The Social Context of Business Lecture #2 - Chapter 1 - September 12th The Canadian Private Sector Forms of Business Ownership Sole Proprietorship (SPs) The simplest form of business organization Advantages: Easy and cheap to start Secrecy Flexibility and control Pride of ownership No special taxes No government regulation Disadvantages Unlimited liability Limited financial resources Limited skills pool Overwhelming time commitment Limited growth Few fringe benefits General partnership Partners are not only liable in equal share for the debts of the partnership (jointly liable) but in addition, each partner is liable for the full amount Limited partnership The special partner’s liability is normally only to the amount of the cash s/he contributed to the partnership Advantages Ease of organization More financial resources Shared management Combined knowledge and skills Faster decision making Disadvantages Unlimited liability Partners are responsible for the business activities of all others Division of profits Disagreements among partners A private corporation: The right to transfer shares is restricted Number of shareholders limited to 50 May not sell shares or debentures to the public A public corporation: Sells shares to the public on a stock exchange
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Is subject to stricter regulations for filing financial reports, must follow certain audit procedures Must file a prospectus if shares are being sold to the investing public Franchises A business established or operated under an authorization to sell or distribute a company’s goods or services in particular area Corporate Governance: Definition The processes, structures, and relationships through which the shareholders, as represented by a board of directors, oversee the activities of the business enterprise.
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