LAW 122 Lecture Notes - Limited Liability Partnership, Sole Proprietorship, Limited Partnership
Document Summary
Performing all contracts entered into in the course of the business, including contracts with customers, suppliers, employees, and lenders. Conducting the business: the owner is exclusively and personally liable for, all torts and contractual or other breaches in regard to the business, all debts of the business. For income tax purposes, income or loss from the business is taxed in the hands of the sole proprietor: most suitable for very small enterprises. Disadvantages: unlimited personal liability (of a sole proprietor): third parties may take all the sole proprietor"s personal assets to satisfy the business obligations, the risk is not restricted to business assets. It extends to the owner"s personal assets: barrier to raising capital, not able to divide ownership, thus only way to finance is to borrow money directly. Partnership overview: a partnership is a common law business organization later codified in provincial partnership statutes, partnerships act, r. s. o.
