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Exam #2 - Coggle Diagram
Exam #2
3 forms of ownership
Sole Propriotorship
Advantages
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Manage buisness affairs yourself
- You become your own boss
- Set your own prices, etc
Not taxed on your buisness, instead taxed as a sole proproter
Diisadvantages
You manage everything yourself
- typically extremely long hours
- legal issues on you
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Hard to get credit loans
- Why would the bank trust 1 person with no history?
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Huge L:iability
- If someone sues you and wins, bank takes everything you have
Partnership
- 2 or more people act as co - owners
Advantages
Easier to get loans from bank
- Easier to trust 2 or 3 people. Chance 1 of the 3 of good credit.
Tax advantages
- like sole propriotrship you are only taxed
Disadvanteges
Bound
- If anything happens to your partner you will be held responsible as well
Hard to withdrawal
- Since ina. sense you are bound to your partner, if you wanted to leave because they were facing legal trouble it would prove cunburomse to do so. This happens because you are held accountable for any debts or obligation the company has at the time of wtihdrawal even if they were that of your partners.
Corporation
- A seperate entity distinct from its owners
Advantages
Lower Liability
- Since it is a seperate entity if someone where to sew you wouldn't lose all of your assets
Attract top talent with valuable increntives
- 401k
- Retirement bonus
- Paid Vacations
- etc
Because it is a seperate entity, if the owner dies the corporation can still run long after their death, think kolonel sanders of KFC!
Ease of transfer of owenrship
- shareholders simply sell their stock iff they don't wish to won buisness anymore
Disadvanteges
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Will be double taxed
- As an individual
- As a buisness
More paperwork/regulations
- Finacial reports and future expectaitons are required to be presented to the public anully, this can pose a problem for teh corporation in that it is harder to maintian cimpany secrets.
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Cooperatives(Co - Ops)
- Each memeber has equal ownershgip and has a voice in how the co.- op should run.
- Exampels of co - ops include home hardware and ocean spray
- formed my mebers to have a higher purchasing power and competing with bigger corporations.
Franchising
Disadvantages
Disputes
- Often times disagreements between the franchisor and franchisee insues, which can be time consuming and expensive.
Cost
- Franchisee often requires a large upfront cost.
Selling of Buisness
- Franchisees must consult with franchisors if they wish to sell buisness to investors
Less Pride
- You took somoenes elses idea. You lack control
Negative halo effect
- if frachisee fucks up the franchisor,e x ecoli breakout, the franchisee has to deal with it, because they are associated.
Advantages
Less Risk
- Proven form to grow a buisness, statistically franchisees have a 90% sucess rate
On site Training
- Often provided with training from franchisors
Toll free Calling
- When we call DRB thats toll free calling we aren't charged for calling them
Easerier acess to fnding
- banks more likely to lend to a proven buisness model
Brand recognition
- Burger king, they can open up a locaiton in lethbridge and because msot of the time burger king in calagry/toronto or lethbreidge tend to taste teh same, they offer more trust and people are willing to try product
Crown Corporations
- Buisnesses owned by the government
- Monopoly happens on g/s that would be impractical for public to own themselves, examples include:
- Canada owning a gas station
Not for profit
- Don't seek to earn a profit