session 7 readings

session 7 readings - Sole proprietorship o Simplest form of...

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Unformatted text preview: Sole proprietorship o Simplest form of business organization o The sole proprietor owns all the assets, entitled to all the profits, and is responsible for all the debts o Makes all the decisions int he operation of the business and is directly responsible for its success or failure o Disadvantages Limited liability to raise capital Management-skill limitations who must assume responsibility for all aspects of the business o Requirements Registration or licensing of the business which can be completed online in a few minutes Persons who offer to the public services of a professional nature must generally be licensed to practice the skill ex. Medicine, dentistry, law Many semi-professional and skilled trade activities are also subject to provincial licensing o Advantages Freedom and flexibility makes it the most attractive form of business organization o However as business becomes larger the need for new and varied management skills requires a change in the form of organization Partnerships o The second phase that a small business may enter into o Increase in the number of proprietors to two or more provides additional management expertise in the operation of the firm, and additional capital o Lending institutions are more willing to extend credit in larger amounts to a partnership than to a sole proprietorship o Partners possess a greater interest than do employees o Increases the chances for growth and development o Must contain of at least two persons o LLP limited liability partnership special case, a hybrid of corporation and partnership o the essential characteristic of the partnership is that it is a relationship that subsists between persons carrying on business in common with a view to profit o the existence of a partnership turns very much on the particular agreement made between the parties, but as a general rule, the sharing of the net profits of a business is prima facie evidence of the existence of a partnership o other than shared profits, if partners contributed capital and actively participated in the management of the business this would be indicative of the existence of a partnership o different from co-ownership by partnership is a contractual relationship (co-ownership may arise through succession/inheritance) a partnership is a relationship that is founded on mutual trust. It is a mutual trust that is not freely alienable. (co-ownership may be freely alienable without the consent of the other co-owner) ex. Alex and Bradley jointly own a block of land. Alexander may sell his interest to Calvin without Bradleys consent and then Bradley and Calvin will become co-owners. This is NOT possible in a partnership partner is generally an agent of all other partners in the conduct of partnership business. (A co owner is normally not an agent of other co-owners) **partners share in partnership property is never real property it is always personalty as it is a share in assets. (co-ownership may be either personalty or personalty as it is a share in assets....
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This note was uploaded on 07/31/2011 for the course ADMS 2610 taught by Professor Joshuasera during the Spring '10 term at York University.

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session 7 readings - Sole proprietorship o Simplest form of...

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