Podcast
Questions and Answers
What is one advantage of a corporation compared to other business structures?
What is one advantage of a corporation compared to other business structures?
- Owned solely by a single individual
- Personal property can be sold to settle business debts
- Requires no formal financial statements
- Easier to raise capital through share sales (correct)
Which of the following best describes a cooperative?
Which of the following best describes a cooperative?
- Managed by a CEO with unlimited voting rights
- Established solely for profit maximization
- Owned by private investors who gain shares
- A business owned by its workers or members (correct)
What is a significant disadvantage of forming a corporation?
What is a significant disadvantage of forming a corporation?
- Forever owned by the state
- Requires no financial transparency
- Complex and costly incorporation process (correct)
- Limited liability for all members
How is ownership divided in a corporation?
How is ownership divided in a corporation?
Which entity is NOT typically associated with limited liability?
Which entity is NOT typically associated with limited liability?
What defines a sole proprietorship?
What defines a sole proprietorship?
Which of the following is an advantage of a sole proprietorship?
Which of the following is an advantage of a sole proprietorship?
What is a disadvantage of partnerships?
What is a disadvantage of partnerships?
How can partnerships make it easier to obtain bank loans?
How can partnerships make it easier to obtain bank loans?
Which statement about the longevity of a sole proprietorship is true?
Which statement about the longevity of a sole proprietorship is true?
What is the primary purpose of a partnership agreement?
What is the primary purpose of a partnership agreement?
Which of the following statements about the structure of partnerships is correct?
Which of the following statements about the structure of partnerships is correct?
Which local example represents a sole proprietorship?
Which local example represents a sole proprietorship?
What factor makes sole proprietorships the most common form of business in Canada?
What factor makes sole proprietorships the most common form of business in Canada?
What issue could arise from partnerships?
What issue could arise from partnerships?
Flashcards
Corporation
Corporation
A business structure where ownership is divided into shares, allowing for flexible ownership and easy capital raising.
Limited liability
Limited liability
The legal protection that limits the liability of shareholders to the amount they invested in the company. Personal assets are not at risk for business debts.
Cooperative
Cooperative
A business owned and controlled by its members, who share in the profits and losses. Each member gets one vote, regardless of how many shares they own.
Financial Statements
Financial Statements
Signup and view all the flashcards
Board of Directors
Board of Directors
Signup and view all the flashcards
Sole Proprietorship
Sole Proprietorship
Signup and view all the flashcards
Partnership Agreement
Partnership Agreement
Signup and view all the flashcards
Partnership
Partnership
Signup and view all the flashcards
Limited Life
Limited Life
Signup and view all the flashcards
Franchise Agreement
Franchise Agreement
Signup and view all the flashcards
Types of Cooperatives
Types of Cooperatives
Signup and view all the flashcards
Advantages of a Corporation
Advantages of a Corporation
Signup and view all the flashcards
Study Notes
Business Ownership Structures
- Various structures exist for business ownership, each with unique characteristics
- Types include sole proprietorship, partnership, corporation, franchise, and cooperative
Sole Proprietorship
- Owned by one person, who is the proprietor
- Proprietor manages all business operations
- Funds for starting the business typically come from personal savings or loans
- Example: Fernandez's Lawn Care Services
- Most common business structure in Canada (over one million)
Sole Proprietorship Advantages
- Simplest business structure to establish
- Owner makes quick decisions and keeps all profits
Sole Proprietorship Disadvantages
- Unlimited liability: owner responsible for business debts
- Personal assets at risk
- Limited life: business ceases if owner leaves or dies
- Higher tax rates than corporations
Partnership
- Owned by two or more individuals
- Partners share costs and responsibilities
- Partnership agreement dictates terms and conditions, including revenue and responsibilities
Partnership Advantages
- Easy to form
- Pooling of economic resources and diverse talents
- Easier to obtain bank loans (due to multiple contributors)
Partnership Disadvantages
- Potential for disputes among partners
- Determining compensation can be complex
- General partners are liable for the company's debts (like in a sole proprietorship)
- Higher tax rates than corporations
Corporation
- Ownership divided into stocks (or shares)
- Can be public or private
- Run by a board of directors
- Example: Manulife Financial
- Offers limited liability (protecting personal assets)
- Can raise capital by selling more stock
Corporation Advantages
- Limited liability (protecting personal assets)
- Easier to raise capital
- Separate legal entity, with continuous life
Corporation Disadvantages
- Costly and complex to start
- Requires legal fees (incorporation)
- Government filings/reports required (public company or not)
Cooperative
- Owned by workers or members
- Members buy products or use cooperative services
- Limited liability (same as a corporation)
- Each member gets one vote in governance (regardless of share amount)
- Run by a board of directors
Cooperative Advantages
- Limited liability
- Status as a separate entity, can continue after owner leaves
Cooperative Disadvantages
- Costly and complex to incorporate
- Requires legal fees
- Requires formalized financial statements for government agencies
Franchise
- Company A (franchiser) grants rights (name, procedures, designs) to Company B (franchisee)
- Franchisee buys license to a ready-made business model
- Example: McDonald's, IKEA
- Independent businesses affiliated for franchise agreement
Franchise Advantages
- Brand recognition
- Provided training and quality control standards
Franchise Disadvantages
- Initial franchise fees
- Monthly franchise fees (often percentage of sales)
- Advertising fees (often percentage of sales)
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
