Forms of ownerships

Question 1

What are the legal forms business ownership?

Answer 1

• Sole proprietorship
• Partnership
• Corporation

Question 2

Sole proprietorship pros?

Answer 2

– Ease of formation
(only need to register)
– Limited paperwork &
regulations
– Retention of control
and profits

Question 3

Sole proprietorship cons?

Answer 3

– Unlimited liability
– Lack of permanence and
impossible to transfer as a
whole
– Limited financial
resources (cannot sell
shares, harder to get
loans)
– Limited ability to attract
and maintain talented
employees

Question 4

partenership pros?

Answer 4

Pooled financial
resources
– Shared
Responsibilities
– Ease of formation
– Possible tax
Advantages

Question 5

partenership cons?

Answer 5

Unlimited and joint
liability
– Lack of continuity /
difficult to transfer
without a contract
– Possible
disagreements
– Need for contract
(suggested)

Question 6

corporation pros?

Answer 6

Limited liability for owners
– Permanence; existence not
tied to the shareholders
(owners)
– Greater ease of financing
(shares/loans)
– Easier to transfer ownership
by selling company shares
– Specialized management (if
hired by owner)

Question 7

corporation cons?

Answer 7

– Paperwork and admin. fees
to form
– More complex
administration due to
reporting regulations
– Double taxation on income
(corporate profits and
dividends to owners)
– Conflicts of interest (if more
than 1 owner/shareholder)