Term
| What is a sole proprietorship? |
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Definition
| A business which has only one owner and is not a separate legal entity from the owner (who does share power or decision making with other owners) |
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Term
| What are four advantages to a sole propriertorship? |
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Definition
- Simplest type of business structure which is easy to form
- Can be sold without obtaining approval from shareholders or other partners
- Owner has right to make all decisions
- If a profit is generated, owner does not share
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Term
| What are three disadvantages to Sole Proprietorships? |
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Definition
- If a company has a loss, sole proprietor suffers all of it
- Can not obtain capital from partners or shareholders
- Sole Proprietor has unlimited personal liability.
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Term
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Definition
| An association of 2 or more persons to carry on a business as co-owners for profit |
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Term
| What two situtations would not fall under a partnership? |
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Definition
1. Passive co-ownership such as being joint tenant of land 2. Non-profit, unincorporated associations like labour unions, organizations, and clubs |
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Term
| What are two important elements of a partnership? |
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Definition
1. The most important is profit sharing which need not be equal and is prima facie evidence. This may be rebutted only by showing that the profit sharing was to pay off debt,rent, etc. 2. Joint Control: Each partner has equal control unless contracted away to a managing partner |
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Term
| What are five common characteristics of a partnership? |
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Definition
1. Limited in duration 2. Transfer of ownership requires agreement 3. May sue and be sued as separate legal entities 4. Unlimited liability of partners for partnership debts 5. Ease of formation, can be informal |
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Term
| Who has the capacity to become a partner? |
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Definition
Anyone who has a capacity to contract: 1. Corporations 2. Minors (though voidable) 3.Individuals 5. Partnerships themselves.. |
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