Management and Organizational Studies 2275A/B Lecture Notes - Lecture 8: Legal Personality, Sole Proprietorship, Fiduciary

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

Document Summary

Disadvantage of a sole proprietorship or partnership is that you carry all risk. Have one or more general partners and one or more limited partners: limited partners enjoy limited liability as long as they don"t participate in the management of the company, limited to their original investment. Why use this over corporation where everyone has limited liability: tax purposes (e. g. get million from bank, from investors, timing of payback is better spread out through saving on taxes. Some as corporation in terms of how it runs, but cash flows are better. Saloman runs a shoe making company and decides he wants to incorporate. Once it is incorporated he sells his assets to the corporation for some cash, shares, and a secured i. o. u saying that if they can"t pay him back they will give back assets. The company goes insolvent and mr. saloman took back his collateral creditors get nothing.