MCS14 - MCS*3040- Business and Consumer Law CHAPTER 14-...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: MCS*3040- Business and Consumer Law CHAPTER 14- BUSINESS FORMS AND ARRANGEMENTS Forms of Business Organization- business for is critical decision affects ; - who is financially liable for business- shares in business profits and other assets - makes and is accountable for management decisions the sole proprietorship sole proprietorship: an unincorporated business organization that has only one owner.- oldest and one of most common forms- simplest in legal perspective cause no legislation pertaining to sole proprietorship- legal consequences really pertain to rights and liabilities of an individual Financial liability- not legally capable of borrowing money on its own- in event of breach of contract, owner is liable ; unlimited liability Unlimited liability: unrestricted legal responsibility for obligations Profit sharing- bears risk of failure, but enjoys all profits ( after taxes accrued) Decision Making - no partners or board of directors to report to- thus able to make business decisions quickly and independently - lots of personal freedom to do as pleases concerning all aspects of business- should owner die, business terminated; has limited life span Disadvantages:- large responsibility - must multitask - so much of enterprise revolves around individual ; what happens on even individual is incapable of carrying on work? - Employees have limited opportunities for advancement ; workers might not be motivated no level of high commitment Sources of Capital - limited access to capital ; limited to own asset and self drawn credit; usually less than what could be available if more than one person involved Taxation- because not legal entity separate from owner, no formal or specialized tax rules that - profit and losses recorded on personal tax income; might be favorable dependent on taxpayers circumstances transferability - cannot be transferred or sold to another because sole proprietorship as no legal status; nothing to transfer - but assets associated with sole proprietorship can be transferred or sold regulations - legal requirements for establishing and conducting sole proprietorship minimal; just commence business actively , no need to insure legal fees- simple and inexpensive - subject to some general legislation as any other business form. E.x. registration and licensing of business - name registry; failure to register name could result in fine or other penalty - also subject to laws of general application the partnership partnership: a business carried on by two or more persons with the intention of making a profit - similar to sole proprietorship such that no legal personality or legal existence separate from those who comprise them- no special steps taken- legal relationship automatically arises when 2 or more people do business together - rules that given partnerships come from 3 sources 1.) partnership legislation ( every province ) 2.) contract law 3.) agency law Financial Liability - each partner is fully responsible for all debt and obligations; joint liability...
View Full Document

Page1 / 7

MCS14 - MCS*3040- Business and Consumer Law CHAPTER 14-...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online