Seneca college Canadian Business Law. Business forms’

BusinessStatute
Organization
Sole
—Proprietorship
Creation
Partnership
a)General
partnership
no formality
register
name under
Business
Names Act (if
using name
other than
partners’
names)
partnership
agreement
(not
required)
Partnerships
Act
(provincial)
no formality
if using
name other
than owner’s,
register
under
Business
Names Act
Legal
Characteristics
no separate
legal identity
apart from
owner
owner has
unlimited
liability
profit/loss
treated as
owner’s income
for tax
purposes
no separate
legal identity
from partners
partners have
joint and
several liability
(unlimited)
profit/loss
treated as
partner’s
income for tax
purposes
Advantages
Disadvantages
simplicity—
inexpensive,
easy to set
up and run
owner
makes all
decisions,
keeps all
profit
unlimited liability
of owner
expansion/raising
capital will require
a new structure
simplicity—
inexpensive,
easy to set
up and run
 partners
can pool
resources
capacity to
take on
larger
projects,
benefit from
economies of
scale
 unlimited
liability for
partnership debts
(including those
incurred by other
partners);
profits are shared
decisions are
made by all
partners (subject
to partnership
agreement)
b) Limited
Partnership
Limited
Partnership
Act
(provincial)
file
declaration
under LPA
partnership
agreement
(not
required)
c) Limited
Liability
Partnership
Partnerships
Act
available
only to
certain
professions
written
partnership
agreement
no separate
legal identity
from partners
general
partners have
unlimited
liability; limited
partners have
limited liability
general
partners
manage the
business; if a
limited partner
manages, will
lose LP status
taxed like
general
partnership
Like general
partnership but
partners are
not liable for
the professional
negligence of
other partners
costs
shared
among
partners
like general
partnership
easier to
attract
investment
limited
liability for
LP’s
more
flexible,
simpler than
corporation
protects
partners
from
more complex
structure
more
documentation
and record
keeping
requirements
unlimited liability
(joint and several)
for general
partners
share profit
unlimited liability
for obligations of
the partnership
that are not caused
by negligence
share profits,
decision making
required
designating
business as an
LLP
registration
under
Business
Names Act is
required
Corporation
Business
Corporations
Act
(federal or
provincial)
 application
to
appropriate
government
office,
including
articles of
incorporation,
NUANS name
search
name must
indicate
corporate
status
negligence of
other
partners
advantages
of other
types of
partnerships
corporation
has separate
legal identity
from
shareholders
shareholders
have limited
liability
officers and
directors
generally have
limited liability
(but unlimited
liability under
certain
statutes)
corporation
enters
contracts, can
sue and be sued
limited
liability
flexibility
for raising
money and
growth
More expensive
complex structure
recordkeeping,
meeting and
reporting
obligations
double taxation
corporation
pays taxes and
dividends are
taxed as
shareholders’
income.
EXERCISE #6: BUSINESS FORMS
GOALS OF ASSIGNMENT
Upon completion of this Business Forms Assignment, you should be able to:
•
•
•
Identify business forms appropriate for specific circumstances.
Explain the advantages and disadvantages of these business forms.
Explain the liability consequences of the choice of business form.
INSTRUCTIONS:
•
•
•
•
•
•
Answer the questions below. The questions should be answered in the chart
provided.
Imagine an Ontario- based business. Give the business a name and describe the
business briefly (2 marks).
Choose the business form that you will use to conduct your imagined business,
and answer the following questions, in connection with that form:
o How do you start/set up this business form – any legal requirements, filings,
agreements? (2 marks)
o Explain 2 reasons why you chose this business form (2 marks)
o Describe 2 disadvantages to using this business form (2 marks)
o If your business gets sued for negligence by a customer, and loses the
lawsuit, whose assets will be available to pay the damages? Why? (2
marks)
Now, identify a different business form that would also be appropriate for your
business, and answer the following questions in connection with this business
form:
o How do you start/set up this business form – any legal requirements, filings,
agreements? (2 marks)
o Explain 2 reasons why you chose this business form (2 marks)
o Describe 2 disadvantages to using this business form (2 marks)
o If your business gets sued for negligence by a customer, and loses the
lawsuit, whose assets will be available to pay the damages? Why? (2
marks)
Finally, describe a situation where your business would enter into an agency
agreement. What authority would your business give the agent? Why would you
use an agency agreement for this? (2 marks)
TIPS FOR SUCCESS: Be specific in your answers – if you choose to use a
partnership, what kind of partnership? Your answers should refer to Canadian law
only and should reflect the concepts that we have covered in class. This is NOT a
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research assignment – all the questions can be answered using course material.
If you use non- course material, you must provide proper in-text citations.
In our case, you can use any materials, but please provide proper in-text citations.
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ANSWER TEMPLATE:
Business Name:
Description of the business:
Question:
Start-up requirements
Business Form #1
Business Form #2
Reasons for choice
Disadvantages
Assets
available
damages
claim
explanation
for
and
Agency scenario/authority given to agent:
Reasons:
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SUMMER 2024