Unit 2: Types of Business Ownership

Question 1

Sole Proprietorship

Answer 1

These types of businesses have a single owner, who is fully responsible for all debts and obligations related to the business. All profits are kept by the owner. Because the owner is personally liable, a creditor can make a claim against their personal assets as well as their business assets in order to satisfy any debt.

Question 2

Partnership

Answer 2

These are non-incorporated businesses that are created between two or more people. The financial resources of those people are combined and put into the business. Those people then share in the profits of the business according to any legal agreement that has been agreed upon and drawn up.

Question 3

Corporation

Answer 3

These are legal entities that are separate and distinct from its owners. These types of businesses enjoy the rights and responsibilities that an individual possesses; that is, these types of businesses have the right to enter into contracts, loan and borrow money, sue and be sued, hire employees, own assets and pay taxes. However, individual owners have limited liability, which means they can’t be personally sued, nor subject to jail time for offences committed by the business.

Question 4

Crown Corporations

Answer 4

These types of businesses are wholly owned by federal, provincial, or municipal organizations. They are structured like private or independent companies. Often, these companies are used for utilities, to manage natural resources, or control and regulate substances. When governments decide to sell them, it is called privatization.

Question 5

Multinational Corporations

Answer 5

These types of businesses have facilities and other assets in at least one country other than its home country. Such companies have offices and/or factories in different countries and usually have a centralized head office where they coordinate global management.

Question 6

Private Limited

Answer 6

These types of businesses do not issue publicly traded shares in Canada and are a huge part of the economy. Many are subsidiaries of multinationals, or are family-owned.

Question 7

Cooperatives

Answer 7

These types of businesses are autonomous associations of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through jointly owned and democratically controlled enterprises.

Question 8

Not for Profit

Answer 8

These types of businesses are organizations that provide products or services without making a profit. They are generally dedicated to activities that improve or benefit a community.

Question 9

Franchise

Answer 9

These types of businesses acquire a license to allow them to have access to a business’s proprietary knowledge, processes and trademarks in order to allow them to sell a product or provide a service under the business’s name.