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Small Business > Week 9 > Flashcards

Week 9 Flashcards

1
Q

Define

Sole Proprietorship

A

A business that is owned (and usually operated) by one person

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2
Q

Define

Partnership

A

An association of two or more persons to act as co-owners of a business for profit.

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3
Q

Define

General Partnership

A

Business co-owned by two or more general partners

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4
Q

General Partner

A

Person who assumes full or shared responsibility for operating a business
Active in day-to-day business operations
May enter into contracts on behalf of the other partners
Unlimited liability for all debts (including those incurred by other general partners)

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5
Q

Define

Limited Partnership

A

Business co-owned by one or more general partners who manage the business and limited partners who invest money in it.

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6
Q

Limited Partners

A

Contributes capital to a business
Has no management responsibility
Has no liability for losses beyond the amount he/she invested

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7
Q

A _________ is not a legal requirement for a partnership to operate, but it is STRONGLY recommended

A

partnership agreement

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8
Q

The Shotgun Clause

A

A provision stating that one partner or shareholder can make a buyout offer to the other partner for her or his share of the business.
The receiving partner has the option of either accepting this offer or buying out the partner who proposed the offer under the exact same terms

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9
Q

Corporations

A

An artificial person (legal entity) created by law with most of the legal rights of a real person including:
The right to start and operate a business
To buy or sell property
To borrow money
To sue or be sued
To enter into binding contracts

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10
Q

A ______ exists only on paper

A

corporation

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11
Q

STOCKS

shares

A

The shares of ownership of a corporation

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12
Q

STOCKHOLDERS (shareholders)

A

A person who owns a corporation’s stock (or shares)

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13
Q

Forming A Corporation

A

A business may register their corporation

Federally
Allows you to do business in all provinces

Provincially
May only operate within the province that you’ve registered

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14
Q

Government Owned (Crown) Corporations

A 
Corporations
Ensures a necessary service is available
Business sector usually reluctant or unable to offer
Often operate at a loss
Local – Toronto Transit Commission
Provincial – Hydro One
Federal – Canada Post
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15
Q

Not-For-Profit (nonprofit) Corporations

A 
Organized to provide a social, educational, religious, or other service rather than to earn a profit
Profits are reinvested into the business
Do not issue stocks or pay out dividends
Do not pay income tax on profits
YMCA, SPCA, charities, museums, etc…
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16
Q

Cooperatives

A

An association of individuals or businesses whose purpose is to perform some business function for its members
More effective than any individual member acting alone
Most prevalent in agriculture, but seen in all segments

17
Q

BUSINESS NAME REGISTRATION

A

If your business name is the same as your name (and you are not a corporation*), you are not required to register your name. ie. John Smith
If your business name is different in any way, it must be registered. ie. John Smith Consulting
It can’t be the same as (or very similar to) an existing corporate name or trade-mark.

18
Q

_________ businesses must register their name in any and all provinces in which it does business

A

Incorporated

19
Q

PROTECTING YOUR NAME

A

Name Searches can be done provincially or federally

Federal Searches
NUANS – Newly Upgraded Automated Name Search
Lists business names and trademarks that sound similar to yours

*A NUANS report is required for Federally Incorporated Businesses and in most provinces (unless you request a Numbered Company)

20
Q

CIPO

A

Canadian Intellectual Property Office

21
Q

NUANS

A

Newly Upgraded Automated Name Search
Lists business names and trademarks that sound similar to yours

A NUANS report is required for Federally Incorporated Businesses and in most provinces (unless you request a Numbered Company)

22
Q

Define

Patents

A

A federal government grant that gives an inventor exclusive rights to his or her invention

23
Q

Define

Copyrights

A

The exclusive right to copy a creative work or allow someone else to do so.

24
Q

Define

Trademarks

A

A word, symbol, or design, or a combination of these, used to distinguish the goods or services of one person or organization from those of others in the marketplace

25
Patents
Granted for products/services that are NEW, USEFUL and INGENIUS Protection applies only in the country where a patent has been issued In Canada patent protection extends for 20 years from date of filing Application fees range from $350 - $500 Patent offices do not ensure your patent is not infringed (that is the responsibility of the patentee) *If you invent something as part of an employment contract, the employer might own the invention and have the right to patent.
26
COPYRIGHTS
Protection for original works - artistic, dramatic, musical, literacy works, performance, sound recording, etc. Copyrights in Canada exist for the life of the author + 50 years after death Copyrights of Canadian authors are valid in most foreign countries and vice-versa Copyrights are acquired automatically when you create an original work The copyright is owned by the person who creates OR commissions the work Registration of copyright helps establish proof of ownership
27
TRADEMARKS
Ordinary marks words and/or symbols Certification marks identify goods/services that meet a government standard Distinguishing guise identifies the unique shape of a product or its package Registration is valid for 15 years and renewable thereafter Rights are only protected in country of registration
28
RED TAPE
``` Business Number (BN) BN Registration Form Used for Canada Revenue Agency Payroll Corporate Income Tax HST Import/Export Vendor Permit Vendor Permit Registration Form Succession Planning Get a Will Business Insurance See pg. 245 (Types of coverages and types of business insurance) ```
29
SUCCESSION PLANNING
With the baby boomers reaching retirement age, a large number of companies will likely change hands in the coming years. Of 609 small business owners, just 24 per cent of small business owners surveyed said they had a succession plan worked out for retirement. Of those polled, whether they had a formal plan or not: 23% said they would simply close their business when it came time to retire 20% planned to sell their business to a third party 18% expected to transfer it to a family member 12% said they'd sell to a partner or employee 27% said they were not yet sure what they'd do
30
SOLE-PROPRIETORSHIP | Advantages
* Absolute control * Simplest form of business * Easy start-up and closure * No contracts, agreements * Legal requirements limited * (name registrations, licenses, permits) * Pride of ownership * Retention of all profits * Flexibility of being your own boss * No special taxes (profits taxed as personal income)
31
SOLE-PROPRIETORSHIP | Disadvantages
* Unlimited liability (personally responsible for the debts of the business) * Lack of continuity * Limited financial resources * Limited management skills * Difficulty in hiring/retaining employees * May be required to pay taxes at a higher rate
32
PARTNERSHIP | Advantages
* General partners have full control * Ease of start-up * Retention of Profits * Pride of ownership * Involvement of others a strong motivating force * No special taxes * Complementary skills and knowledge * Less personal stress/pressure * More effective decision-making * Improved availability of capital and credit
33
PARTNERSHIP | Disadvantages
* Unlimited liability * (*limited partners risk only their original investment) * Management disagreements * One partner can make decisions that bind all others * Lack of continuity (may be provided for in partnership agreement) * Potential for a frozen investment * Need for written agreements
34
CORPORATION | Advantages
* Shared control * Limited liability * Ease of raising capital * Ease of transfer of ownership * Perpetual existence * Specialized management * Improved recruitment and retention * Professional image
35
CORPORATION | Disadvantages
* Difficult and expensive to formulate * Many government regulations and paperwork * Activities restricted to those spelled out in its charter * Conflict within the corporation * Double taxation * Lack of secrecy

Small Business (12 decks)

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