Management and Organizational Studies 2275A/B Lecture Notes - Lecture 9: Sole Proprietorship, Profit Sharing, Legal Personality

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 2275A/B
• Professor: Philip King

Document Summary

Choosing how to own a business is critical because it determines who: is financially liable for the business, shares in business profits and other assets, makes and is accountable for management decisions. Sole proprietorship: an unincorporated business organization that has only one owner. Represents the simplest form of business organization because there is no legislation pertaining to the sole proprietorship as such. Ex: luke, raina and roger could run their business as a sole proprietorship with one being the sole proprietor and the other being employees. However, these are the implications associated with doing a sole proprietorship: Financial liability: any obligation of the business is luke"s personal obligation, ex: if luke decides to borrow money from the bank, it is luke who promises to repay the loan. This is because a sole proprietorship is not legally capable of borrowing money on its own.