definition: an organization that produces or sells goods or services to satisfy the needs, wants,...
DESCRIPTION
There Are Several Different Business Structures There Are Many Factors To Consider Selection Of A Business Structure Should Be Based Upon Adequate Information The Decision Should Be Made After Weighing All ConsiderationsTRANSCRIPT
Definition: An organization that produces or sells
goods or services to satisfy the needs, wants, and demands of consumers for the purpose of making a profit.
Franchise
There Are Several Different Business Structures
There Are Many Factors To Consider
Selection Of A Business Structure Should Be Based Upon Adequate Information
The Decision Should Be Made After Weighing All Considerations
Choosing the Best Business Ownership
Franchise
1. How easy is it to set up, manage, operate and liquidate?
2. Taxation - What are the tax advantages and disadvantages?
3. Asset Protection - What are your potential legal liabilities?
4. Fringe Benefits - What can the company provide & deduct?
5. Estate Planning - What happens to the business at ones death?
Choosing the Best Business Ownership
Issues/Questions to Ask:
Choosing the Best Business Ownership
Sole Proprietorship -> is a business owned and operated by one person for profit
1. Simple and inexpensive to create and operate.2. Owner reports profit or loss on his or her personal tax return.3. Easy to liquidate.
1. Owner personally liable for business debts.2. Business ends with death of owner.
Main Advantages
Main Drawbacks
Type of Entity
-> Easiest Form of Business to Set Up and Operate
1. No formal process.
2. Obtain all necessary federal, provincial and local licenses and permits.
3. Register Assumed Name Certificate (if necessary).
4. Obtain Employer Identification Number (if necessary).
Assumed Name Certificate
General rule - if the business (e.g., sole proprietorship
& general partnership) is conducted under an
assumed name (a name other than the surname of the
individual (s)), an assumed name certificate should be
filed or registers in the region that the business plans
to operate.
Example: Sole Proprietor
• Hair Salon
• Auto Repair Shop
• Barber Shop
• Corner Variety
Store
• Doctor
• Contractor
• Book keeper
• Dog walker
• Artist
• Actor
• Fisherman
• Taxi Driver
-> has at least one general partner and one or more partners who have limited liability who are not involved in management anddecision-making
1. Limited partners have limited personal liability for business debts as long as they don't participate in management.
2. General partners can raise cash without involving outside investors in management of business.
Type of Entity
Main Advantages
Main Drawbacks1. General partners personally liable for business debts.2. More expensive to create than general partnership.3. Suitable mainly for companies that invest in real estate.
1. Cross between a partnership and a corporation, with mostly partnership characteristics.
2. Tax advantages of a partnership.3. Limited liability of a corporation.
1. Owners have limited personal liability for business debts even if they participate in management.
2. Profit or loss can be allocated differently than ownership interests.3. Moderately easy to liquidate.
Main Advantages
Main Drawbacks1. More expensive to create than partnership or sole proprietorship.2. May or may not terminate upon death or withdrawal of member.3. Cannot have more than two of the four characteristics of a
corporation.
Type of Entity
-> two or more individuals who contribute money, labor, and skill to a business, and who share in its profits, losses, and management.
1. Simple and inexpensive to create and operate.2. Owners (partners) report their share of profit or loss on their
personal tax Returns. 3. Easy to liquidate.
1. Owners (partners) personally liable for business debts.2. Terminates upon death or withdrawal of partner, unless there is
a partnership agreement to the contrary.
Type of Entity
Main Advantages
Main Drawbacks
Example: Partnership
• Accounting Firm
• Law Firm
1. Formed under Federal or Provincial laws.2. Legally it is treated as an artificial person, distinct from the
individuals who own it.
1. The most complex form of business to set up and operate.2. Monitored by federal, provincial and local agencies.3. Profits may be subject to double taxation.4. Limited legal liability.5. Business continues after death of owner/transferability of shares.6. Difficult and expensive to liquidate
Attributes
Main Drawbacks
1. More expensive to create than partnership or sole proprietorship.2. Paperwork can seem burdensome to some owners.3. Separate taxable entity.
Type of Entity
Example: Corporation
• General Motors
• Ford Motor
Company
• Bell Canada Inc.
• Rogers Cable Inc.
• Dofasco Inc.
• Stelco Inc.
• Home Depot Inc.
• Rona Inc.
• Petro Canada Inc.
• Royal Dutch Shell Inc.
• Cineplex Odeon Inc.
• Coca Cola Inc.
1. Owned by its members.2. All members get one vote.3. Members elect a board of directors.
1. Lower costs of goods or services.2. Set up is easy and inexpensive.
Main Advantages
Main Drawbacks
1. Members diverse needs or wants can lead to difficulty in the decision making process.
Type of Entity
Example: Cooperatives
• Mountain Equipment Co-op
• The Co-Operators Group Inc.
• Arctic Co-operatives Ltd.
• Calgary Co-op.
• CoopeTarrazú
1. One business licenses another to use its name, operating procedure and so on.
2. As a hybrid, can have any form of ownership.
1. Association with a well established brand, reputation and product or service.
2. Assistance with site selection, lease negotiation, site development, builders and shop fitters.
Main Advantages
Main Drawbacks
1. Less autonomy in some business decisions.2. Restricted territory in which you may operate and or promote
your product
Type of Entity
Franchise
Example: Franchises
• Pizza Hut
• Arby’s.
• Derry Queen.
• Subway.
• KFC.
• Tim Hortons.