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LAW 122 Chapter Notes - Chapter 21: Sole Proprietorship

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School
Ryerson University
Department
Law and Business
Course
LAW 122
Professor
Eric Libman

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Document Summary

Determines the extent to which individual entrepreneurs benefit when business prospers and extent to which they are responsible for losses: explain how a sole proprietorship is created and how it operates. Business license is necessary for some type of activities: describe the advantages and disadvantages of using a sole proprietorship to carry on business. Raising money: only method of financing is for sole proprietorship to borrow money: identify and apply the factors that determine when a partnership comes into existence. General partnership: form of business org that comes into existence when 2+ ppl carry on business together with view to profit: no formalities required (need to register name and obtain license, partner cannot be employed by partnership, all benefits of partnership business accrue directly to partners, all partners, even those who did not consent to particular obligation, are personally liable for all obligs of business.

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Related Questions

Which of the following is an advantage of a sole proprietorship?

a) It is easy to expand if it succeeds.

b) It faces few government rules.

c) It is easy to get financing to start one.

d) It has the lowest federal income taxes.

In a sole proprietorship, the profits earned by the business are:
 
A. taxed as income for the business, but exempt from the personal income tax paid by the owner.
 
B. taxed at the lowest corporate rate.
 
C. the property of the owner, except for taxes owed to the government.
 
D. tax-free if the appropriate exemption is filed with the local government.
or over five years, Rick was the CEO of JB Guitars Inc, a corporation operating a chain of retail guitar stores. He had gained tremendous practical experience and decided to start his own business selling guitars. When he first started working at JB Guitars, Rick agreed not to carry on a competing business for two years after he ended his employment with the corporation. To avoid breaching that contract, Rick incorporated a corporation named Generation X Guitars Inc to carry on the business. He is the sole shareholder, director, and president. JB Guitars claims that the new corporation is just a way of getting around the non-competition agreement and has sued for a court order prohibiting Generation X Guitars from carrying a business competing with JB Guitars. Will JB Guitars be successful?