Core Curriculum Chapter 8 Flashcards
BUSINESS STRUCTURES - What are the main types of business entities in Canada?
Sole proprietorship, partnership, corporation, joint venture, non-profit, charity, co-operative, and social enterprise.
SOLE PROPRIETORSHIP - What are the characteristics of a sole proprietorship?
Owned by an individual, no legal separation from personal assets, easy to set up, taxed at personal rates.
PARTNERSHIP - How is a partnership structured?
Two or more individuals share ownership and profits, with income taxed at the partner level.
CORPORATION - How is a corporation taxed in Canada?
A corporation is a separate legal entity that files its own tax return (T2) and may qualify for the Small Business Deduction (SBD).
JOINT VENTURE -What is a joint venture?
A temporary partnership where participants collaborate on a single project, with profits and losses flowing directly to them.
NON-PROFIT -What is the difference between a non-profit and a charity?
A non-profit operates for purposes other than profit and is usually tax-exempt, while a charity is registered with the CRA and can issue tax-deductible receipts.
CO-OPERATIVE - What are the common types of co-operatives?
Consumer co-ops, producer co-ops, worker co-ops, and multi-stakeholder co-ops.
TAXATION - How is business income taxed for sole proprietors?
Business income is reported on the owner’s personal tax return (T1) and taxed at personal rates.
TAXATION - How is income taxed in a partnership?
Partnerships file an information return, but partners report their share of income on their personal tax returns.
CORPORATE TAX - What is the Small Business Deduction (SBD)?
A reduced corporate tax rate available to Canadian-controlled private corporations (CCPCs) on active business income up to a threshold.
GST/HST - When must a business register for GST/HST?
Businesses must register if they generate over $30,000 in annual revenue.
PAYROLL TAX - What payroll deductions must employers withhold?
Employers must deduct and remit income tax, CPP contributions, and EI premiums for employees.
FINANCIAL STATEMENTS - What are the four main financial statements used in business?
Income statement, balance sheet, cash flow statement, and statement of changes in equity.
FINANCIAL STATEMENTS - What does the income statement show?
It reports a business’s revenue, expenses, and net profit or loss over a specific period.
BUSINESS VALUATION - What are the three main methods of valuing a business?
Asset-based valuation, earnings-based valuation, and market-based valuation.
BUSINESS VALUATION - What are common sources of business financing?
Debt financing (loans, bonds, credit lines), equity financing (selling shares), and government grants.
BUSINESS EXPENSES - What types of expenses are deductible for tax purposes?
Advertising, rent, salaries, utilities, professional fees, and business travel expenses.
BUSINESS STRUCTURES - What are the main advantages of incorporating a business?
Limited liability, tax deferral opportunities, and easier access to capital.
BUSINESS LICENSING -What registration requirements exist for businesses?
Businesses may need a municipal license, GST/HST registration, workers’ compensation coverage, and corporate filings.
