Chapter 5 Flashcards
What are the advantages of a sole proprietorship?
You get to make al important decisions for day 2 day activities. You get all the income earned by business and you’re taxed as a personal income instead of paying special provincial income taxes
What are the disadvantages of a sole proprietorship?
You have to supply different talents, you are dependent on your own financial resources, you have unlimitied liabiliy for any loss, and personal assets can be taken away
What is a partnership?
A business owned by two or more people. Setting it up is more complex than a sole proprietorship but its still relatively easy and inexpensive.
What is the partnership agreement?
It specifies everyone’s rights and responsibilities and provides details of the amount of cash contributions made by each partner, division of partnership income, conditions of a partner selling an interest, conditions for dissolving the partnership, and settling disputes.
What is unlimited liability in a partnership?
Each partner is personally libable for their own/partners actions. If a business doesn’t have enough assets to cover losses you can be personally sued.
What is a limited partnership?
You can have two types of partners. 1. A single general partner who runs the business and is responsible for the liabilties and 2. any number of limited partners whos limited involvement in the business and whos losses are limtied to the amount of their investment.
What are advantages of a partnership?
Can bringe diverse indivudals to share responsibility of a company, makes financing easier, can use personal resources to secure bank loans, partners can allow the partnership to survive if one or more partners die
What are the disadvantages of a partnership?
They are subject to unlimited liability, you have to share decisions, and need to share profits
What is a cooperative?
A legal entity that has limited liability, an unlimited life span, elected board of directors, and admin staff. They are autonomous businesses owned and democratically controlled by members. They do not retain any prfits therefore are not subject to taxation
What is buyer cooperative?
When members purchasing power is combined. Pooling buyer power and buying in volumes increase purchasing power and efficiency resulting in lower prices. Membersget shares of the profit based on how much they bought
What is seller cooperatives?
Indivudal producers join to compete more effectively with large producers.
What are the advantages of cooperatives?
They empower people to imrprove their quality of life and enhance economic opportunties through self help. They provide members with credit/financial services, energy, consumer goods, affordable housing and telecommunications.
What the principles cooperatives must follow?
- Open membership 2. democratic member control 3. members economic participation 4. autonomy 5. education and training
What is a corporation?
A legal entity that is entirely seperate from the parties who own it. It can enter binding contracts, buy and sell property, sue and be sued, held responsible for actions, and can be taxed
What is ownership and stock?
Corporations are owned by shareholders who invest money in the business by buying shares of stock. The shareholders elect a board of directors who are legally responsible for govering it.
