FIN 300 Lecture Notes - Lecture 1: Limited Liability Partnership, Limited Liability, General Partnership

• School: Ryerson University
• Department: Finance
• Course: FIN 300
• Professor: Aaron Tucker

Document Summary

Business owned and ran by one person, usually small with few employees. Most common type of business unit in the economy, but business wise they"re small in profits and revenue. Key principle is there"s no separation between firm and owner. Business"s income is taxed as personal income of the owner. Owner has unlimited personal liability for any of the firm"s debt. Lenders acquire debt repayments form the owners through owner"s personal assets. Owners who can"t afford to pay back the lender (aka pay back loans) that they"re personally liable must file for bankruptcy. Difficult to transfer ownership to any other persons. Disadvantages outweigh the advantages for growing businesses. As soon as the firm reaches the point where they can use their own money instead of being liable to a lender, is when the firm switches to another form. Partnership owned and ran by more than one owner. All partnerships have their business income taxed as their personal income.