Business: Chapter 2

sole proprietorship

a business owned by a single person

unlimited liability

the owner is responsible for all loss in the company

partnership

a business owned by 2 or more people

partnership agreement

outlines the terms of a partnership

general partnership

all partners have unlimited liability

limited partnership

each partners liability is limited to the amount they invest

limited liability

the amount of liability (responsibility) on a person based on their own investments

a share

a unit of ownership in a corporation

Board of Directors

put in place to manage the money of shareholders

dividend

A form of company profit that shareholders can receive

private corporation

a corporation owned by a small number of owners

public corporation

a corporation owned by a larger number of shareholders

crown corporation

a business operated by the federal or provincial government

co-operative

a business owned by the workers or members who buy the goods/services

franchise

a business that can licence rights to other businesses (franchiser and franchisee)

SOHO

small office; home-based office

e-commerce

allows consumers to use the internet to buy goods from home

debt financing

getting a bank loan/borrowing money to start a business is an example of…

equity financing

using investors to start a business is an example of…

forecasting

allows a business to predict future conditions

revenue

subtracting costs and expenses from _________ determines if there is profit or loss

joint venture

combines the skills and expertise of two different business so they both benefit

strategic alliance

an arrangement between two companies to undertake a mutually beneficial project while each retains its independence (relationship between CBC and Toronto Star)

merger

when 2 or more companies join together to become a single organization

offshoring

the transferring activities or ownership of a complete business process to a different country from the country (or countries)

multinational corporations

take advantage of the best resources of several countries

retail business; manufacturing business; service business; not-for-profit business

types of business

franchises

are not a form of business ownership because it is a hybrid

international franchise

a way to achieve an international presence by buying the rights to a chain operation franchiser

sole proprietorship advantages

you are the boss; you keep all the profits; start-up costs are low; establishing and operating your business is easy bc its one person

sole proprietorship disadvantages

all the responsibility for making day-to-day business decisions is yours; it can be hard to take holidays; you’re taxed as a single person

partnership advantages

your business is easy to establish and start-up costs are low; there is opportunity for income splitting, resulting in tax savings

partnership disadvantages

each partner is an agent of the partnership and is liable for actions by other partners; if partners join or leave, you will have to value all the partnership assets which can be costly

corporation advantages

easier access to capital; corporations can borrow money at lower rates; lower tax rates; corporations are taxed separately from their owners; limited liability; continuous existence

corporation disadvantages

costs of incorporation; significant record-keeping and filing requirements

cooperative advantages

there are equal voting rights for members; liability for members is limited; there is no limit on the number of members

cooperative disadvantages

members have equal voting rights regardless of investment; legal limits on payments of dividends on shares may not suit an investor-driven business

franchise advantages

little to no industry experience is necessary; existing customer base and brand awareness.; lower risk than starting an entirely new business; support from the franchise owner; limited creative opportunities

franchise disadvantages

costs and fees; lack of independence; limited growth potential; restrictive franchise agreement