Business Lecture Notes - Business Lectures Week#7 19:04...

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Unformatted text preview: Business Lectures Week #7 19:04 Forms of Business Ownership • Legal Forms of Business Ownership o Unincorporated vs. Incorporated Businesses Incorporated: Private Corporation Public Corporation Unincorporated: Sole proprietorship- owned and operated by one person for his/her own private profit Partnership- extension of sole proprietorship. Unincorporated business owned and operated by more than one person for their own private profit Legal Terms: • The law in Canada does not differentiate between the owner of the corporation and the business itself, legally seen as the same. • Ex. Joe has many Personal Assets (home, car, boat, cottage, investments, etc.) • Operates Business as a sole proprietor, owns barber shop. Business assets include all fixtures. • No distinction between the business’ assets and personal assets, one big pool of assets • One major disadvantage in owning a sole proprietor Implications for Liability of Owners • An entity created by law that has a legal status that is both separate and distinct from that of it’s owners and possessing all of the rights of an individual o Right to sue, be sued in its own name o Right to enter into contracts in its own names • The act of incorporating gives the creator the major advantage of limited liability • Corporate Veil- the veil is set up between a corporation and the personal assets of the owner, which doesn’t allow creditors to stake claim on the owners personal assets in the event of bankruptcy o Personal vs Corporate Tax System The personal tax system in Canada is a graduated or progressive system As an individual’s level of taxable income increases, the individual’s combined federal/ provincial marginal tax rate also increases Unlike the personal tax system, corporations are taxed in Canada on the basis of a fixed rate system Regardless of how much money the corporation makes in net income, the rate of taxation remains the same We will be examining the fixed tax rates faced by both private and public corporations Example: $750,000 taxable income ‘Large’ Public Corporation Public Corporation • Federal tax 18% x $750.000 $135,000 • Ontario Tax 12% x $750,000 $90,000 $225,000 o Taxation of Unincorporated Businesses In Canada the law does not distinguish between the owner(s) of an unincorporated business and the business itself Legally viewed as being one and the same Therefore the profits (net income) earned from operating an unincorporated business...
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This note was uploaded on 05/08/2011 for the course BUS 111 taught by Professor Jimmccutcheon during the Fall '09 term at Wilfred Laurier University .

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Business Lecture Notes - Business Lectures Week#7 19:04...

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