Module 2 Flashcards
What are the advantages to a Sole Proprietorship?
-Easy to set up
-Low start-up costs
-Minimal working capital required
-Tax advantages to owner
-All profits to owner
What are the disadvantages to a Sole Proprietorship?
-Unlimited liability to owner
-Risk of business stoppage in absence of owner
-Difficult to raise capital
What are the 3 types of partnerships?
-General partnership
-Limited partnership
-Limited Liability partnership
What are the drawbacks of a General Partnership?
-Each partner is liable for the actions of their partners
-Each partner is entitled to an equal share of profits, regardless of contribution
What are the types of partners in a Limited Partnership?
-General Partners: manages the partnership; has unlimited liability for all debts
-Limited Partners: cannot manage; essentially passive investors; liability is limited what they’ve contributed to the partnership
What document is registered with the AB Corporate Registry in order to begin a Limited Partnership? What is contained in this doc?
Certificate of Limited Partnership. Includes name of partnership, length of time partnership is to exist, circumstances under which the partnership would be dissolved.
What are the advantages to an LLP?
-Low start-up costs
-easy to set up
-possible tax advantages
-limited gov regulation
-additional sources of capital and resources
What are the disadvantages to an LLP?
-wider individual liability
-divided authority
-difficulty finding suitable partners
-conflicts between partners
-difficult to raise capital
What statute governs corporations?
Business Corporations Act
What did the Business Corporations Act replace? What does the old act still govern today?
Companies Act in 1982. Still governs some ‘not for profit’ organizations under section 9.
What are the advantages to Corporations?
-limited liability
-specialized management
-separate legal existence
-continuous existence
-ownership is transferrable
-easier to raise capital
What are the disadvantages of Corporations?
-gov regulated
-most expensive to organize
-extensive record keeping
-possible conflict between directors and shareholders
What form of business organization may be formed to promote art, science or religion?
not for profit
What verifies that a corporation is valid and subsisting?
Certificate of Status
