By the finish of the chapter, you should be may be to:

Identify the concerns to asking in selecting the appropriate kind of property for a business.Describe the single proprietorship and also partnership forms of organization, and specify the benefits and disadvantages.Identify the different species of partnerships, and also explain the prestige of a cooperation agreement.Explain just how corporations are formed and also how castle operate.Discuss the benefits and flaw of the corporate type of ownership.Examine special species of organization ownership, including limited liability companies, cooperatives, and not-for-profit corporations.Define mergers and also acquisitions, and explain why suppliers are motivated to merge or acquire other companies.

You are watching: A ____ invests money in the business but has no management responsibility.


Show What friend Know

The ice Cream Men

Who would have actually thought it? 2 ex-hippies with strong interests in social activism would end up beginning one the the best-known ice cream cream carriers in the country—Ben & Jerry’s. Possibly it was expected to be. Ben Cohen (the “Ben” the Ben & Jerry’s) constantly had a fascination through ice cream. Together a child, the made his own mixtures by smashing his favourite cookies and candies right into his ice cream cream.

Ben Cohen and also Jerry greenfield from licensed CC through SA

But the wasn’t until his an elderly year in high institution that he ended up being an main “ice cream man,” happily driving his truck through areas filled with children eager to buy his ice cream cream pops. After high school, Ben tried college yet it wasn’t because that him. The attended Colgate college for a year and also a half before the dropped out to return to his real love: being an ice cream man. The tried university again—this time at Skidmore, where he learned pottery and jewelry making—but, regardless of his an option of courses, still didn’t prefer it.

In the meantime, Jerry greenfield (the “Jerry” of Ben & Jerry’s) was following a similar path. He majored in pre-med at Oberlin college in the really hopes of one day becoming a doctor. Yet he had actually to provide up ~ above this goal once he to be not welcomed into clinical school. On a positive note, though, his college education and learning steered him into a more rewarding field: the civilization of ice cream making. He obtained his very first peek at the ice cream industry when he operated as a trowel in the college student cafeteria at Oberlin. So, fourteen year after they first met ~ above the junior high institution track team, Ben and Jerry reunited and also decided to get in ice cream making huge time. They moved to Burlington, Vermont—a college town in require of an ice cream parlor—and completed a $5 correspondence food from penn State on making ice cream cream. After gaining an A in the course—not surprising, offered that the tests were open book—they take it the plunge: through their life savings of $8,000 and $4,000 of borrowed funds they collection up an ice cream shop in a made-over gas station on a busy street corner in Burlington.<1>The next large decision to be which form of organization ownership was ideal for them. This thing introduces girlfriend to your options.

The Canadian Landscape

Innovation, Science and also Economic development Canada (ISED) defines a service based upon the number of paid employees. For this reason, self-employed and also “indeterminate” companies are usually not consisted of in the current publication as they execute not have paid employees.

Accordingly, this publication defines an SME (small-to-medium enterprise) as a business establishment with 1–499 payment employees, much more specifically:

A little business has actually 1 come 99 paid employees.A medium-sized business has 100 come 499 payment employees.A large business has actually 500 or much more paid employees.

ISED also categorizes businesses v 1-4 employees together micro-enterprises.

“As of December 2015, there to be 1.17 million employer businesses in Canada, as presented in Table 1.1-1. That these, 1.14 million (97.9 percent) businesses were little businesses, 21,415 (1.8 percent) were medium-sized businesses and also 2,933 (0.3 percent) were huge enterprises.” (Industry Canada)


Factors come Consider

If you’re starting a new business, you need to decide i m sorry legal form of ownership is best for you and also your business. Perform you desire to own the company yourself and also operate together a single proprietorship? Or, carry out you want to share ownership, operating as a cooperation or a corporation? prior to we discuss the pros and also cons of these three species of ownership, let’s deal with some that the concerns that you’d probably ask yourself in selecting the ideal legal type for your business.

In setup up her business, do you desire to minimization the costs of obtaining started? do you hope to avoid complicated government regulations and reporting requirements?How much regulate would friend like? exactly how much duty for to run the business are you willing to share? What about sharing the profits?Do you desire to protect against special taxes? carry out you have all the skills needed to run the business? space you most likely to get together with your co-owners over an extended period of time?Is it important to you that the organization survive you? What space your jae won needs and also how execute you plan to finance your company? just how much personal exposure come liability room you ready to accept? carry out you feel uneasy around accepting an individual liability because that the action of other owners?

No single kind of property will give you everything you desire. You’ll have to make part trade-offs. Because each option has actually both benefits and disadvantages, your project is to decision which one supplies the functions that are most vital to you. In the adhering to sections we’ll compare 3 ownership choices (sole proprietorship, partnership, corporation) on this eight dimensions.

Sole Proprietorship and Its Advantages

In a single proprietorship, you make all crucial decisions and also are generally responsible for every day-to-day activities. In exchange for assuming every this responsibility, you obtain all the earnings earned by the business. Revenues earned are taxed as personal income, so friend don’t need to pay any special federal and also provincial earnings taxes.

Disadvantages of sole Proprietorships

For plenty of people, however, the sole proprietorship is not suitable. The flip next of enjoying finish control is having to supply all the different talents that may be vital to make the business a success. And also when you’re gone, the organization dissolves. You likewise have to depend on your very own resources because that financing: in effect, you space the business and any money obtained by the service is loaned to you personally. Even much more important, the sole proprietor bears countless liabilityfor any losses occurs by the business. The principle of unlimited an individual liability method that if the service incurs a debt or suffers a disastrous (say, getting sued for bring about an injury to someone), the owner is personal liable. Together a single proprietor, you put your personal assets (your bank account, her car, maybe also your home) at danger for the benefits of your business. You have the right to lessen your risk with insurance, yet her liability exposure deserve to still be substantial. Offered that Ben and Jerry made decision to start their ice cream cream business together (and as such the service was not owned by only one person), they could not collection their agency up together a single proprietorship.


A partnership(or general partnership) is a service owned jointly by two or much more people. About 10 percent the U.S. Businesses room partnerships<2>and despite the vast majority are small, part are rather large. Because that example, the large four public accounting firms, Deloitte, PwC, ernst & Young, and KPMG, room partnerships. Setting up a partnership is more facility than setup up a sole proprietorship, however it’s still reasonably easy and inexpensive. The expense varies follow to size and also complexity. It’s feasible to kind a an easy partnership there is no the help of a lawyer or one accountant, despite it’s normally a great idea to get professional advice.

Professionals can aid you identify and also resolve problems that might later produce disputes amongst partners.

Provincial and federal governments likewise support tiny businesses and also offer complimentary resources and opportunities for funding. Canada business Network(
canadabusiness #SMEPME)is a collaborative arrangement amongst federal departments and also agencies, provincial and territorial governments and also not-for-profit entities.

It provides webinars and other learning events throughout the country. Because that example, Ontario’s small Business Access, provides workshops, a aid line, funding, and provides up-to-date information on legal requirements.

The partnership Agreement

The influence of disputes can be reduced if the partners have executed a well-planned cooperation agreementthat states everyone’s rights and responsibilities. The agreement might administer such details as the following:

Amount the cash and other contribute to it is in made by each partnerdivision of partnership revenue (or loss)Partner responsibilities—who does whatConditions under i m sorry a partner can sell an attention in the companyConditions for dissolving the partnershipConditions for settling disputes

Unlimited Liability and the Partnership

A significant problem v partnerships, as with sole proprietorships, is limitless liability: in this case, each partner is personally liable not only for his or her very own actions but additionally for the actions of all the partners. If your partner in an architecture firm provides a failure that reasons a structure to collapse, the loss your organization incurs impacts you just as lot as it would him or her. And also here’s the really bad news: if the organization doesn’t have the cash or various other assets come cover losses, you deserve to be personally sued for the amount owed. In other words, the party who endured a loss due to the fact that of the error have the right to sue you for your an individual assets. Many people are understandably wake up to get in into partnerships since of unlimited liability. Specific forms of businesses allow owners to limit their liability. This include minimal partnerships and corporations.

Limited Partnerships

The legislation permits service owners to kind a limited partnershipwhich has actually two varieties of partners: a solitary general companion who runs the business and also is responsible for its liabilities, and any number of restricted partners that have minimal involvement in the business and whose losses are limited to the quantity of their investment.

Advantages and Disadvantages that Partnerships

The partnership has several benefits over the sole proprietorship. First, that brings with each other a diverse group that talented people who share duty for running the business. Second, it provides financing easier: the company can attract on the financial sources of a variety of individuals. The partners no only add funds to the service but can also use an individual resources to secure financial institution loans. Finally, continuity needn’t be an issue since partners can agree legitimate to allow the cooperation to survive if one or more partners die.

Still, there space some negatives. First, as questioned earlier, partners are subject to countless liability. Second, being a partner way that you need to share decision making, and many people aren’t comfortable v that situation. Not surprisingly, partners regularly have distinctions of opinion on exactly how to run a business, and disagreements can escalate to the point of dangerous the continuance of the business. Third, in addition to share ideas, partners likewise share profits. This arrangement can occupational as lengthy as every partners feel that they’re gift rewarded according to your efforts and accomplishments, yet that isn’t constantly the case. If the partnership type of ownership is viewed negatively by some, the was specifically appealing come Ben Cohen and also Jerry Greenfield. Starting their ice cream company as a partnership to be inexpensive and let them combine their limited financial resources and also use their diverse skills and talents. As friends lock trusted each other and welcomed mutual decision making and profit sharing. They were also not reluctant to be held personally liable for each other’s actions.


A corporation(sometimes dubbed a continuous or C-corporation) differs from a single proprietorship and also a partnership since it’s a legal entity that is entirely separate from the next who own it. That can enter into binding contracts, buy and also sell property, sue and be sued, be hosted responsible because that its actions, and be taxed. When businesses with any comprehensive size, that is helpful to organize as a copy, group so that its owners have the right to limit your liability. Corporations, then, have tendency to be much larger, ~ above average, 보다 businesses utilizing other creates of ownership.Most huge well-known businesses room corporations, however so are plenty of of the smaller firms through which likely you carry out business.

Ownership and Stock

Corporations space owned by shareholderswho invest money in the business by buying share of stock. The part of the copy, group they very own depends on the portion of share they hold. For example, if a corporation has issued 100 share of stock, and also you own 30 shares, you own 30 percent of the company. The shareholders selected a plank of directors, a group of civilization (primarily from outside the corporation) who space legally responsible for governing the corporation. The plank oversees the significant policies and decisions do by the corporation, to adjust goals and holds administration accountable for achieving them, and hires and also evaluates the top executive, generally referred to as the CEO (chief executive officer). The board likewise approves the distribution of revenue to shareholder in the kind of cash payments called dividends.

Benefits the Incorporation

The corporate kind of organization offers several advantages, including limited liability because that shareholders, greater accessibility to financial resources, committed management, and continuity.

Limited Liability

The most important advantage of organization is the limited liabilityto i m sorry shareholders are exposed: they room not responsible because that the duties of the corporation, and they deserve to lose no much more than the amount that they have personally invest in the company. Minimal liability would have been a huge plus for the unfortunate individual whose service partner shed down your dry cleaning establishment. Had they been incorporated, the coporation, group would have actually been liable because that the debts occurs by the fire. If the corporation didn’t have enough money to salary the debt, the separation, personal, instance shareholders would not have been causing obligation to salary anything. They would have actually lost every the money that they’d invest in the business, however no more.

Financial Resources

Incorporation likewise makes it feasible for businesses come raise funds by selling stock. This is a large advantage as a company grows and also needs much more funds to operate and compete. Depending on its size and also financial strength, the corporation likewise has an benefit over other develops of organization in getting bank loans. An established corporation can borrow its very own funds, but when a small business needs a loan, the financial institution usually needs that the be guarantee by the owners.

Specialized Management

Because of their dimension and capacity to salary high sales commissions and also benefits, corporations are typically able come attract much more skilled and also talented employee than space proprietorships and also partnerships.

Continuity and Transferability

Another advantage of organization is continuity. Due to the fact that the corporation has actually a legitimate life different from the lives of that owners, it have the right to (at least in theory) exist forever.

Transferring property of a copy, group is easy: shareholders just sell their stock come others. Part founders, however, want to limit the german of their stock and so pick to operate as a privately-held corporation. The share in this corporations is organized by just a few individuals, who space not enabled to offer it to the basic public.

Companies through no such restrictions on share sales are called public corporations; stock is easily accessible for sale to the basic public.

Drawbacks to Incorporation

Like sole proprietorships and partnerships, corporations have both hopeful and negative aspects. In single proprietorships and partnerships, because that instance, the people who own and also manage a business are the same people. That company managers, however, nothing necessarily very own stock, and shareholders nothing necessarily occupational for the company. This case can be difficult if the purposes of the two groups differ significantly.

Managers, because that example, are often much more interested in career development than the as whole profitability the the company. Stockholders might care more about revenues without regard because that the health of employees. This instance is well-known as the firm problem, a problem of interest natural in a connection in i beg your pardon one party is an alleged to plot in the finest interest that the other. The is frequently quite an overwhelming to prevent self-interest from entering right into these situations.

Another drawback to incorporation—one that regularly discourages small businesses native incorporating—is the fact that companies are more costly to set up. As soon as you combine filing and also licensing fees with bookkeeping and lawyer fees, incorporating a company could set you earlier by $1,000 come $6,000 or more depending top top the size and scope of her business.<3> Additionally, corporations space subject to levels of regulation and governmental monitor that have the right to place a load on small businesses. Finally, corporations are subject to what’s generally called “double taxation.” Corporations room taxed by the federal and also provincial governments on your earnings. Once these earnings are distributed as dividends, the shareholders pay taxes on this dividends. Corporate profits are thus taxed twice—the corporation pays the taxes the very first time and also the shareholders pay the count the second time.

The Canadian Comparison

“Incorporation: tax savings, but an ext paperwork”, a 2017 short article in The Globe and Mail, puts organization in to the Canadian perspective:

In Ontario, an incorporated company pays a tax rate of 15 per cent ~ above the first $500,000 of income each year, many thanks to the little business taxation deduction, and also 26.5 every cent for anything past that. Rates vary by province. A lower tax rate is one of the vital advantages to incorporating a business. However, accountants make the difference that the count aren’t being saved, yet instead deferred. It is because, when the money is taken the end of the coporation, group for an individual use, through salary or dividends, the individual winds up paying roughly the same tax price as if they to be a sole proprietor. It’s recognized as the “theory that integration” in the Canadian taxes system.

Most accountants recommend business owners combine if they can afford to leave money in the agency longer-term through the score of the town hall the value of the heritage grow.

Another tax advantage comes when it’s time to sell the business. The share of many Canadian exclusive corporations space eligible because that a lifetime capital-gains exemption. In 2016, the exemption quantities to the an initial $824,176 of resources gains from an individual income tax, every shareholder. If the business were a single proprietorship, any kind of gain native the sale of a private corporation would certainly be taxed.

Another advantage to incorporating is the opportunity to use revenue splitting amongst family members. If one spouse makes an ext money, you have the right to income-split. Over all, both spouses will be in a reduced income-tax bracket.

Another benefit of incorporation, beyond taxes, is the capacity to shift liability to the corporation and also away indigenous the individual. Incorporating have the right to also add credibility; some larger companies require home builders to it is in incorporated prior to they deserve to be hired.

The flaw to incorporation are increased paperwork and administration. That has the one-time expense to set up the corporation, including accounting and legitimate fees, which deserve to run to more than $1,000. Owners likewise have to paper two taxes returns, a personal one and a more complicated one for the business.

Five year after beginning their ice cream business, Ben Cohen and also Jerry green field evaluated the pros and cons that the corporate type of ownership, and also the “pros” won. The major motivator to be the have to raise accumulation to build a $2 million production facility. Not only did Ben and Jerry decision to move from a partnership to a corporation, however they additionally decided to market shares of stock to the general public (and thus end up being a publicly corporation). Your sale of share to the general public was a little unusual: Ben and also Jerry wanted the neighborhood to own the company, so instead of providing the stock to everyone interested in purchase a share, they readily available stock to occupants of vermouth only. Ben thought that “business has actually a responsibility to give back to the neighborhood from which the draws the support”.<4>He want the firm to be owned by those that lined up in the gas station to buy cones. The stock was so well-known that one in every hundreds Vermont family members bought share in the company.<5>Eventually, as the agency continued to expand, the stock was offered on a nationwide level.

Other varieties of organization Ownership

In enhancement to the 3 commonly adopted forms of service organization—sole proprietorship, partnership, and also regular corporations—some business owners select other forms of company to meet their particular needs. We’ll look at numerous of these options:

Limited liability companiesCooperativesNot-for-profit corporations

Limited legal responsibility Companies

How would you choose a legal form of company that provides the attractive attributes of the three usual forms of organization (corporation, sole proprietorship and partnership) and avoids the unattractive features of this three company forms? The restricted liability agency (LLC)accomplishes exactly that. This kind provides service owners with restricted liability (a vital advantage of corporations) and also no “double taxation” (a vital advantage of sole proprietorships and also partnerships). Stop look in ~ the llc in an ext detail.

In 1977, Wyoming ended up being the an initial state to allow businesses to run as restricted liability companies. Two decades later, in 1997, Hawaii became the critical state to give its approval to the brand-new organization form. Since then, the restricted liability firm has increased in popularity. That is rapid expansion was fueled in component by changes in state statutes that permit a minimal liability firm to have actually just one member. The trend to LLCs have the right to be saw by reading company names top top the next of trucks or on shop in your city. It is typical to check out names such as Jim Evans Tree Care, LLC, and For-Cats-Only veterinary Clinic, LLC. But LLCs space not restricted to tiny businesses. Companies such together Crayola, domino Pizza, Ritz-Carlton Hotel Company, and also iSold that (which helps people sell their undesirable belongings on eBay) room operating under the minimal liability kind of organization. In a restricted liability company, owner (called members rather than shareholders) room not personal liable for debts of the company, and its earnings are taxed only once, in ~ the an individual level (thereby eliminating dual taxation).

We have touted the services of minimal liability security for an LLC. Us now need to suggest out some scenarios under which an llc member (or a shareholder in a corporation) might be organized personally liable for the fan of his or her company. A organization owner deserve to be organized personally liable if he or she:

Personally promises a service debt or bank loan which the company fails come pay.Fails to pay employment taxes to the government.Engages in cheat or illegal behavior that harms the company or someone else.Does not treat the agency as a different legal entity, for example, uses agency assets for personal uses.


Source: MEC in Ottawa retrieved from

A cooperative(also known as a co-op) is a organization owned and controlled through those who usage its services. Individuals and also firms that belong to the cooperative join with each other to industry products, acquisition supplies, and provide services because that its members. If run correctly, cooperatives increase profits because that its producer-members and lower costs for the consumer-members. Cooperatives are relatively common in the agricultural community. For example, part 750 cranberry and also grapefruit member growers sector their cranberry sauce, fruit juices, and also dried cranberries v the s Spray Cooperative.<6>More than 3 hundred thousands farmers attain products they need for production—feed, seed, fertilizer, farm supplies, fuel—through the Southern states Cooperative.<7>Co-ops additionally exist external agriculture. Because that example, MEC(Mountain equipment Co-op), which sells high quality outdoor gear, has an ext than 5 million members across the country, who have actually each payment $5 because that their life time memberships.The agency shares its jae won success v its members and also gives back 1% that its sales to preserve participation in the outdoors.

Not-for-Profit Corporations

A not-for-profit corporation(sometimes referred to as a nonprofit) is one organization created to serve some public function rather 보다 for jae won gain. As lengthy as the organization’s activity is for charitable, religious, educational, scientific, or literary purposes, it can be exemptfrom paying revenue taxes. Additionally, individuals and other institutions that add to the not-for-profit corporation have the right to take a taxes deduction because that those contributions. The varieties of teams that normally apply for nonprofit standing vary widely and also include churches, synagogues, mosques, and other areas of worship; museums; universities; and conservation groups.

Since Statistics Canada finished its deep collection of non-profit statistics in 2008, the many recent data obtainable is:

170,000 charitable and also non profit organizations in Canada85,000 of these room registered charities (recognized by the Canada Revenue Agency).Over 13 million world volunteer for charities and nonprofits

Do girlfriend think this numbers have increased or diminished over the last decade? Why?

Mergers and Acquisitions

Track how easily you can match some the the an ext recent, bigger mergers or major corporations.

If you execute not see the embedded match game, access it:

The title read, “Wanted: much more than 2,000 in Google rental spree”.<8>The largest net search engine in the world was disclosing its plans to prosper internally and also increase its workforce by more than 2,000 people, with fifty percent of the hires coming indigenous the unified States and the other fifty percent coming from other countries. The included employees will assist the company expand into new markets and also battle for worldwide talent in the vain Internet information providers industry. As soon as properly executed, internal expansion benefits the firm.

An alternative approach to development is come merge through or acquire one more company. The rationale behind expansion through mergers or salvation is the 1 + 1 = 3: the combined agency is much more valuable than the sum of the two separate companies. This reason is attractive come companies encountering competitive pressures. Come grab a bigger re-superstructure of the market and improve profitability, companies will want to become much more cost effective by combine with various other companies.

Though they are frequently used as if lock synonymous, the state merger and acquisition mean slightly different things. A mergeroccurs when two companies integrate to kind a new company. An acquisitionis the acquisition of one company by another.

The Canadian Landscape

In June 2013, Shoppers medicine Mart, Canada’s greatest pharmacy chain combined with Loblaw, Canada’s biggest grocery retailer, in a 12.4 billion dollar deal. Rather than cutting into each other’s sector share, the deal enables the two providers to beat on each other’s strengths. Shoppers has around $1 billion in food sales annually, matches Loblaw’s $30 billion. Yet Loblaw’s share of the pharmacy sector is only 5 per cent, so including Shoppers wellness products and services to Loblaw grocery stores allows the food retailer to increase its services in what it sees together a farming sector: health, wellness and nutrition. ( Comparison this merger v an salvation in that very same year. Sobey’s gained 200 Safeway stores in west Canada under a 5.8 exchange rate dollar deal. Follow to news reports, along with 213 Safeway grocery store stores — an ext than 60 percent of which space in Calgary, Vancouver, Edmonton and Winnipeg — Sobeys will likewise acquire:

199 in-store pharmacies;62 gas stations;10 liquor stores;4 primary circulation centres and a connected wholesale business; and12 production facilities.

Sobeys will also get $1.8 billion worth of real estate in the deal.

Another instance of an salvation is the purchase of Reebok by Adidas for $3.8 billion.<9>The deal was supposed to offer Adidas a stronger presence in phibìc America and assist the firm compete through rival Nike. Once this acquisition was completed, Reebok as a firm ceased to exist, despite Adidas still sells shoes under the Reebok brand.

Motives Behind Mergers and also Acquisitions

Companies are urged to merge or gain other suppliers for a variety of reasons, including the following.

Gain security Products

Shoppers medicine Mart started to offer President’s choice products in that merger with Loblaw. Loblaw is able to add Shoppers health treatment products to its shelves.Sobey’s profit Safeway’s gas stations and also liquors stores in its acquisition.

Attain new Markets or distribution Channels

Sobey’s acquired access to 12 manufacturing facilities, 4 distribution centres, and a connected wholesale business.Loblaw increases accessibility to city centres where Shoppers are already located, bringing a broader variety of commodities to client in densely populated areas.

Realize Synergies

Integration that the companies’ loyalty programs will administer the two through a huge knowledge base of consumers’ buying actions and carry out economies of scale — which, the service providers estimate, will translate into save of about $300 million annually.Loblaw’s re-superstructure of the pharmacy market is only 5 per cent so including Shoppers health products and services come its grocery stores will enable the food retailer to broaden its solutions in what that sees together a farming sector: health, wellness and nutrition.

The Less-Friendly Option

Hostile Takeovers: Ben and Jerry’s

What happens, though, if one company wants come acquire an additional company, but that firm doesn’t want to it is in acquired? The outcome might be a hostile takeover—an plot of assuming control that’s stood up to by the targeted company’s management and its board of directors. Ben Cohen and also Jerry Greenfield, the ice cream Cream males from above, uncovered themselves in one of these situations: Unilever—a very big Dutch/British company that owns 3 ice cream brands—wanted come buy Ben & Jerry’s, against the founders’ wishes. Most of the Ben & jerry stockholders sided v Unilever. Castle had tiny confidence in the capacity of Ben Cohen and also Jerry green field to continue managing the agency and were frustrated v the firm’s social-mission focus. The stockholders chosen Unilever’s market to buy your Ben & Jerry’s share at practically twice its current market price and wanted come take their profits. In the end, unilater won; Ben & jerry was gained by unilever in a hostile takeover.<10>Despite fears that the company’s social mission would end, it didn’t happen. Though neither Ben Cohen nor Jerry greenfield are associated in the present management of the company, they have actually returned to their social to work roots and also are heavily connected in countless social initiatives sponsored through the company.

Solidifying the Vocabulary

Use this quick task to certain you recognize the vocabulary concerned mergers and acquisitions.

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Important terms and concepts

A single proprietorship is a company owned by only one person.Advantages include: complete control for the owner, easy and also inexpensive to form, and also owner gets to keep all of the profits.Disadvantages include: endless liability for the owner, finish responsibility because that talent and also financing, and business disappear if the owner dies.A basic partnership is a company owned together by 2 or more people.Advantages include: much more resources and also talents come with boost in partners, and the organization can proceed even after ~ the death of a partner.Disadvantages include: partnership disputes, countless liability, and also shared profits.A minimal partnership has a solitary general partner who runs the business and also is responsible because that its liabilities, plus any type of number of restricted partners that have limited involvement in the business and also whose casualty are restricted to the lot of their investment.A corporation is a legal entity that’s separate from the next who very own it, the shareholders who invest by buying share of stock. Corporations room governed through a board of Directors, elected by the shareholders.Advantages include: minimal liability, easier access to financing, and also unlimited life for the corporation.Disadvantages include: the firm problem, dual taxation, and incorporation expenses and regulations.A restricted liability firm (LLC) is similar to an C-corporation, but it has actually fewer rules and also restrictions 보다 an C-corporation. Because that example, one LLC deserve to have any number of members.A participating is a organization owned and also controlled by those who use its services. Individuals and also firms who belong to the participating join together to market products, purchase supplies, and administer services for its members.A not-for-profit copy, group is an organization created to serve some public function rather than for jae won gain. It enjoys favorable tax treatment.A closing occurs when two companies incorporate to kind a brand-new company.An salvation is the purchase of one company by another with no brand-new company gift formed. A enemy takeover occurs once a agency is purchased also though the this firm management and Board the Directors perform not want to it is in acquired.