chapter 2 Flashcards
what is a sole proprietorship?
a business owned by one person, normally known as the proprietor. as a sole proprietor you declare your business income on your personal income tax
Advantages and disadvantages of sole proprietorship?
A: starting the business is easier and less expensive
D: Unlimited liability makes organizing difficult, if the owner dies, the business ends
what does the sole proprietor do?
have many responsibilities- buy merchandise, sell, accounting, arrange displays & cleans the store
What is a partnership
a business that is usually operated by two or more individuals who want to share the costs and responsibilities of running a business. They record the terms of their partnership in a partnership agreement.
Advantages and disadvantages of a partnership
A: Easy to set up, able to borrow money from the bank
D: Unlimited liability, when one person dies the business ends
Example of sole prorietorship
Longo’s plumbing
example of partnerships
A&W, Baskin Robins
What is a corporation
A seperate legal entity owned by shareholds through share and is led by a board of directors
Ads and Disads of Corporations
A: Easier to raise financing, can have lower tax rate
D: more expensive to set up
more complex government and reporting and regulation
example of corporation
apple, coca cola
what is a co-operative
Owned through shares but each person can only own one share
Ads and disads of co-operative
A: organized on a democratic principle of one member, one vote, limited liability
D: no incentive to invest more as you only own one share
example of co-operative
insurance company
what is a franchise?
one business, the franchiser, licences the rights to its name, operating procedure, designs, and business expertise to another business, the franchise. the franchiser and the franchisee are independent businesses affiliated for this agreement only
A and D of a franchise
A: can make a large profit over time
D: chance you can go bankrupt
