Sept 17 ADM LEC - ADM LEC Forms of Ownership Sole...

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ADM LEC – Forms of Ownership Sole Proprietorships, Partnerships, and Corporations Sole Proprietorship: When management and ownership of a business are one and the same The oldest and most common form of legal ownership in Canada (60%-70%) Advantages: Easy to form/dissolve; must be legal License may be required; simplicity Government preferential treatment Sole claim on all profits (losses) Personal incentive / satisfaction Pays only personal income tax Secrecy Disadvantages: Unlimited liability Lack of continuity (uncertainty of duration i.e. death or incarceration) Difficulty in raising monies Management limitations Partnership: When two or more people combine their financial, managerial, and technical abilities to operate a business for profit. Types: 1. General Partnerships - all partners have unlimited, or general, liability 2. Limited Partnership - one general partner (by law) - one or more limited partners (investors) Articles of Partnership: Prevents misunderstanding and Ill-will at some future date Not legally required in Canada Advantages: Easy to form Owners are taxed at personal rate Larger availability of money Diversification of managerial skills Retention of valuable employees Personal interest/satisfaction
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Disadvantages: Usually, unlimited liability (joint and several liability) Management difficulties Difficult to withdraw investment o Death o Insanity o Incarceration o Simple withdraw Canadian Income Tax A progressive graduated tax system – the more taxable income, the more you pay into the tax. One of the highest taxed countries in the world, second to Italy 51.6% is the highest a single individual can be taxed Very high bracket, sole proprietor will never pay that more than Corporations Economic/Social Benefits:
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This note was uploaded on 12/08/2009 for the course TEFLER ADM1300 taught by Professor Koppel during the Fall '09 term at University of Ottawa.

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Sept 17 ADM LEC - ADM LEC Forms of Ownership Sole...

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