Business Ownership Structures

• Business ownership structures differ in liability, taxation, and management.

Sole Proprietorship

• A single person owns and runs the business.
• The owner has unlimited liability.
• It is the simplest form of business to establish.
• It has limited access to capital.
• The business's lifespan is limited to the owner's.
• The owner retains all profits.
• All income is taxed as personal income.

Partnership

• It involves two or more owners.
• Liability can be limited or unlimited, usually unlimited, depending on the partnership agreement.
• Income is taxed as personal income.
• It has a limited lifespan.
• Responsibility is shared among partners.
• Profits are shared among partners.

Corporation

• It is a separate legal entity from its owners.
• It can sue or be sued and own property.
• Owners have limited liability, up to the amount of their investment.
• It is owned by shareholders.
• Each share typically grants one vote.
• It faces double taxation: the corporation pays taxes on profits, and shareholders pay taxes on dividends.
• Managed by a board of directors.
• Shareholders elect the board of directors at annual meetings and can vote by proxy if they cannot attend in person.
• Corporations issue three types of securities: common shares, preferred shares, and bonds.

Common Shares

• All corporations must issue common shares.
• Ownership gives the right to vote, but dividends are not guaranteed.
• The value depends on the corporation's profits.

Preferred Shares

• Shareholders receive fixed dividends.
• Ownership usually does not include voting rights.
• Paid before common shares if the corporation ends.

Bonds

• Involves lending money to a company and receiving interest payments.
• Bondholders have no ownership in the company.
• It is considered the safest investment option but offers the least return.
• Paid before preferred shares if the corporation ends.

Co-operative

• It is owned and run by its members for shared benefit.
• Members have limited liability.
• Each member gets one vote, regardless of investment size.
• It is democratically run, with each member having an equal say.
• Profits (surpluses) are shared among members or used to lower prices for members.
• A portion of the co-op's profits (patronage dividend) is given to members based on their usage of the co-op's services or products.
• Examples include Gay Lea Foods Co-operative Limited, Mountain Equipment Co-op (MEC), Calgary Co-op, Ontario Co-operative Association, The Co-operators Group, and Vancity.

Franchise

• It is a license granted by a corporation (franchisor) to an individual or entity (franchisee) to sell a product or service using the franchisor's trade name.
• Business that uses another company’s brand and system.
• Franchisees pay a franchise fee and royalties (a percentage of sales) to the franchisor.
• The franchisee is a semi-entrepreneur.
• The franchisor provides training and support.

Crown Corporation

• A company owned by the government that provides goods or services to the public.
• Examples include BC Hydro, Canada Post, CBC, NRC, AECL, CMHC, and EDC.

Privatization, Nationalization, and Public Trading

• Privatization is the process of the government selling a business to private owners.
• Nationalization is when the government takes control of a private business.
• A publicly traded corporation is a business that sells shares to the public on the stock market.
• Liability defines the extent of the owner's responsibility for the business's debts and obligations, with limited liability being more favorable.

Stock Exchange

• It is an organized market where listed stocks are bought and sold.
• It is a physical building.
• Canada has four main stock exchanges: Vancouver, Toronto, Calgary, and Montreal.

Stock Trading - Buying

• To invest, select a stockbroker.
• Full-service stockbrokers offer advice and charge a commission of 2-3 percent.
• Discount brokers do not provide advice and charge 1 to 1.5 percent commission.
• Meet with the broker to outline investment objectives and receive advice.
• Place an order with the broker.
• Orders are relayed to the stock exchange's computer or to traders on the floor of the exchange.
• Traders negotiate and settle on a price.
• The transaction is recorded on an electronic ticker.
• Pay for the shares and broker's commission.

Stock Trading - Selling

• To get money, one must sell stocks.
• Decide to sell and ask the broker for a quote or check the newspaper.
• Choose to sell shares at the market price.
• Orders are relayed to the stock exchange's computer or to traders on the floor of the exchange.
• Traders negotiate and settle on a price.
• The transaction is recorded on an electronic ticker.
• Sell shares and pay the broker's commission.

The Entrepreneur

• An entrepreneur starts their own business or aggressively expands an existing one.

Characteristics of an Entrepreneur

• Innovative
• "Go-getter" attitude
• Risk-taking
• Resilient
• Hard Working
• Motivated
• Self-Confident
• Objective, seeking expert help

Why Businesses Fail

• 4 out of 5 new businesses fail in the first 5 years due to:
• Personal characteristics.
• Insufficient time to maintain the business.
• Lack of knowledge about running a business.
• Failure to understand the market.
• Severe competition.
• Small markets.
• Time needed to build sufficient customers.

Venture Center

• An industrial incubator that helps new businesses grow by providing support and resources.
• Offers low rent.
• A development officer offers guidance.
• Cost-sharing services.
• A business advisory committee gives expert advice.

Explanation of the most common business structures: sole proprietorship, partnership, and corporation. Differences in liability, taxation, and management are highlighted. Focus on liability and taxation for each type.