Class 2 - Forms of Business Ownership 1 Flashcards
What is a sole proprietorship?
Enterprise or business venture by one single person. A business requires a continuum of transactions (cant just be one isolated transaction such as selling your phone)
Who must register with the enterprise registrar?
Mandatory if: Using a business name; or selling tabacco/artificial tanning; or if expected revenue exceeds $30 000
Optional: using first and last name or using a pseudonym in pursuit of artistic, literary or other cultural activity.
What are the requirements for a company name?
In Quebec, the name should be french (conformity with charter of french language)
Business name must not include expression which law reserves for other person or is prohibited
Business name cannot include immoral, obscene or scandalous notion
Business name must accurately reflect intent of the business
When does a declaration of registration need to be submitted with the enterprise registrar?
No more than 60 days after the date on which registration becomes compulsory. Exception is for tobacco retail sales outlates and artificial tanning salons where it must be filed within 30 days.
MUST UPDATE ANNUALY regadless of need for updates
What is the liability in a sole prop?
No distinction in law between sole proprietor and their business. Sole proprietor has unlimited personal liability for all debts
What is the ownership structure in a sole prop?
Sole proprietor owns 100% of their business, profits are considered personal income and are taxed as such
What is the management structure in a sole prop?
Sole prop has complete control
How does ownership transfer work in a sole prop?
Ownership cannot be transferred, however the assets can be sold. The assets can be inherited however you cannot inherit the sole proprietorship itself
How does the termination of a sole prop work?
Terminated when: Owner dies, owner stops business.
Must file a declaration of cancellation
What are the advantages and disadvantages of sole prop?
Advantages: simple start-up, low start-up costs, easy to dissolve, complete control
Disadvantages: Unlimited liability, lack of continuity, financing difficulties, goodwill difficulties
What is a partnership?
An enterprise or business venture by two or more individuals
What is the start-up process of a partnership?
Must file declaration of registration within same timeframe as sole prop (60 days except for 30 day exceptions)
What is the liability in a partnership?
No distrinction in law between partners and business, both of them have unlimited liability for the debts and are solitarily liable.
Partners may come to an agreement that a given partner is not responsible for the debt of the partnership however this agreement is not enforceable on creditors.
How does ownership work in a partnership?
Division of ownership is determined by partners, it does not have to be equal but is presumed to be unless otherwise stated
How does termination of a partnership work?
Agreement of the partners or in the event of deal.
Bankruptcy
Must file declaration of cancellation
