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AFM231 Chapter 14: Chapter 14

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tanscorpion990
13 Sep 2015
School
University of Waterloo
Department
Accounting & Financial Management
Course
AFM231
Professor
Robert Timberg

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Document Summary

Makes and is accountable for management decisions. An unincorporated business organization that has only one owner. Simplest form of organization no legislation. Registration or licensing of business varies in requirements provincially; professionals need to be licensed to practice. A business carried on by 2 or more persons with the intention of making a profit. No steps in creating partnership automatic when 2+ people. Governing rules from partnership legislation (provincial), contract, and agency law. Joint liability: liability shared by 2 or more parties where each is personally liable for the full amount of the obligation. Each partner"s personal assets can be seized and sold through the judicial process if the partnership assets are insufficient to satisfy partnership obligation. Partners decide how to split profits and assets of firm. Partnership legislation requires equal sharing if they can"t agree. 2+ people pooling resources management base should be strong. Downside will need to reach consensus and consent from all partners.

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Related Questions

For a would-be entrepreneur, selecting the proper form of business organization is a very important first step in the process. After some consideration and an assessment of your skills and education, you have decided to start a medical billing service that will provide services to providers in the local geographical area. Ideally, you would like to service physicians, dentists and hospitals.

Determine which of the three forms of business organization (sole proprietorship, partnership or corporation) would be the most appropriate for your new business. Why did you select the form of business organization that you chose? Identify at least three things that should be taken into consideration when making this selection. (4 points)

Based on the form of business organization that you selected, answer the following questions:

a. How easy or difficult is it to set up this form of business organization? (4 points)

b. What type of liability do you have in this form of business organization? (4 points)

c. What tax implications do you need to consider for this form of business organization? (4 points)

d. What will happen to the business if something happens to you, the business owner? (4 points)

Jane Doe, who has substantial personal wealth and income, is considering the possibility of starting a new business in the chemical waste management field. She will be the sole owner, and she has enough funds to finance the operation. The business will have a relatively high degree of risk, and it is expected that the firm will incur losses for the first few years. However, the prospects for growth and positive future income look good, and Jane plans to have the firm pay out all of its income as dividends to her once it is well established. Which of the legal forms of business organization would probably best suit her needs?
Answer

Proprietorship, because of ease of entry.

S corporation, to gain some tax advantages and also to obtain limited liability.

Partnership, but only if she needs additional capital.

Regular corporation, because of the limited liability.

In this situation, the various forms of organization seem equally desirable.

You are a consultant who advises potential new business owners.An acquaintance is planning to start a small business that he wantsto run as a sole proprietor. But he explains that he does notunderstand other business forms that he may adopt, and two of hisfriends may want to join the business in management roles. Thebusiness will be a landscaping firm that is expected to growrapidly and require large investments in equipment in two to threeyears. Create a PowerPoint presentation for the potential newbusiness owner that compares and contrasts the three main businessforms and addresses advantages and disadvantages of each form.Include examples of types of businesses that would best fit eachform. Present your recommendation for best business type for thenew business owner.