COM 315 QUESTIONS AND ACCURATE ANSWERS
According to article 1525 of the Civil Code, an enterprise is - Answers - The carrying on
by one or more persons of an organized economic activity, whether or not it is
commercial in nature, consisting of producing, administering or alienating property, or
providing a service, constitutes the carrying on of an enterprise
What are the forms of business ownership most frequently used in Canada? - Answers -
Sole Proprietorship
Partnership
Corporation
The Provincial Government has the right to regulate which kinds of Ownership? -
Answers - Sole Proprietorship & Partnership because the owners are considered to
have personally undertaken the risk and keep the profits, either alone or together
Which is the most common and least complex form of business for start-ups? - Answers
- Sole Proprietorship
What is the definition of a sole proprietorship? - Answers - It encompasses any and all
enterprise undertaken by one single individual, who remains the sole owner and retains
full authority to manage the administration of the enterprise
Can a minor use the defense of lesion (claiming they were unfairly taken advantage of
due to their age) to escape their responsibilities under contracts entered for the purpose
of their business? - Answers - No! They are considered to be of full age when it comes
to transactions related to their business
The exception to having to register your business (sole proprietorship) to the QC
government is when: - Answers - you used your personal name for the name of the
business
Can someone else use a registered name? - Answers - No, registering your company
name gives you permanent rights to its use and prevents anyone else from using it
Where can you check registered company names? - Answers - Anyone can check
online or in person in the "Declarations of Sole Proprietorship"
Can you transfer ownership of a Sole Proprietorship? - Answers - No, since the sole
proprietor and the enterprise are seen as one in the same in the eyes of the law
Who is Liable in a Sole Proprietorship? - Answers - The owner has unlimited and
personal liability
,When can a Sole Proprietorship be terminated? - Answers - Upon the death of the
owner, or when the owner ceases to do business
What are the advantages of a sole proprietorship? - Answers - Simple Registration -
easily done by owner
Inexpensive to start - costs under $50 to register
All profits belong to the owner
All decisions made by the owner
Flexibility
Simple to dissolve
Enjoyment and challenge of personal involvement
Operations and Results can be kept secret
What are the disadvantages of a sole proprietorship? - Answers - - Owner is personally
liable for all debts (unlimited liability)
- Difficult to obtain outside financing (capital)
- Depend only on skills of owner (might be too specialized)
- Lack of Continuity
- No legal distinction between owner and business
- Restrictions on hiring members of owner's family including spouse and children under
19, under income tax regulations
- May be difficult to sell "goodwill" if reputation depends heavily on the personality of the
owner
- All profits are considered to be earned by the sole proprietor personally and are taxed
at full personal income tax rates
What is the definition of "Good will?" - Answers - The Value of the reputation, credibility,
and reliability that a business has built up over a period of time. It is an intangible factor,
and thus it is often very difficult to assign a financial value to it
What is a partnership? - Answers - When two or more people agree to operate a
business together, this agreement forms a contract between them known as the
Contract of Partnership
What is a Partnership Agreement? - Answers - Not required by law, it is a written
contract that reduces any potential future disagreements since the owners wrote down
the details of their business relationship here.
How do you start up a Partnership? - Answers - All partnerships are required to register
a Partnership Declaration that identifies the partners, the location, and the type of
business
Is transfer of ownership possible in Partnerships? - Answers - Yes, within limits: either
when one partner dies or wishes to cease doing business
, T/F: Each partner has unlimited, personal liability for the debts of their enterprise. -
Answers - True, partners are solidarily liable for the partnership debts (any one or more
of the partners may be required to pay all or part of any debt owed)
What should be included regarding the management of the enterprise in the Partnership
Agreement? - Answers - - How much time each partner will devote to the business
- What responsibilities each partner will have
- What happens if one of the partners becomes too ill to work in the business
What is the one arrangement of profits in a Partnership not allowable under the QCC? -
Answers - One which excludes a person from any share of the profits (a partner must
have some share in the profits, no matter how small)
In a Sole Proprietorship or Partnership, are you taxed on earnings reinvested into the
enterprise? - Answers - Yes, it is still considered personal earnings
How can a Partnership be terminated? - Answers - Being a relatively fragile form of
business:
- By the agreement of the partners
- By the bankruptcy of the business
- Upon the accomplishment of its objective
- Some by the death/bankruptcy of 1 partner
How does a limited partnership differ from a general partnership? - Answers - It differs
in the liability for debts and in the right to participate in the management of the business.
The special partners are liable for the debts only to the extent of a stipulated amount
they contributed, as stated in the partnership declaration. If not stated, they are soldarily
liable, just like the general partners.
How can a special partner check on the business? - Answers - They can meet
periodically with their partners to discuss the business, but cannot partake in any day-
to-day operations
What are the advantages of a partnership? - Answers - - Simple registration
- Inexpensive to start - under $50
- Profits shared only between partners
- Partners able to assist each other
- Partners pool their talents
- Quite flexible
- Simple to dissolve
- More scope for specialization
- Enjoyment of personal involvement
- Limited Partnership allows for some limitation in liability
What are the disadvantages of a partnership? - Answers - - Partners personally liable
for all debts and the liability is solidary
According to article 1525 of the Civil Code, an enterprise is - Answers - The carrying on
by one or more persons of an organized economic activity, whether or not it is
commercial in nature, consisting of producing, administering or alienating property, or
providing a service, constitutes the carrying on of an enterprise
What are the forms of business ownership most frequently used in Canada? - Answers -
Sole Proprietorship
Partnership
Corporation
The Provincial Government has the right to regulate which kinds of Ownership? -
Answers - Sole Proprietorship & Partnership because the owners are considered to
have personally undertaken the risk and keep the profits, either alone or together
Which is the most common and least complex form of business for start-ups? - Answers
- Sole Proprietorship
What is the definition of a sole proprietorship? - Answers - It encompasses any and all
enterprise undertaken by one single individual, who remains the sole owner and retains
full authority to manage the administration of the enterprise
Can a minor use the defense of lesion (claiming they were unfairly taken advantage of
due to their age) to escape their responsibilities under contracts entered for the purpose
of their business? - Answers - No! They are considered to be of full age when it comes
to transactions related to their business
The exception to having to register your business (sole proprietorship) to the QC
government is when: - Answers - you used your personal name for the name of the
business
Can someone else use a registered name? - Answers - No, registering your company
name gives you permanent rights to its use and prevents anyone else from using it
Where can you check registered company names? - Answers - Anyone can check
online or in person in the "Declarations of Sole Proprietorship"
Can you transfer ownership of a Sole Proprietorship? - Answers - No, since the sole
proprietor and the enterprise are seen as one in the same in the eyes of the law
Who is Liable in a Sole Proprietorship? - Answers - The owner has unlimited and
personal liability
,When can a Sole Proprietorship be terminated? - Answers - Upon the death of the
owner, or when the owner ceases to do business
What are the advantages of a sole proprietorship? - Answers - Simple Registration -
easily done by owner
Inexpensive to start - costs under $50 to register
All profits belong to the owner
All decisions made by the owner
Flexibility
Simple to dissolve
Enjoyment and challenge of personal involvement
Operations and Results can be kept secret
What are the disadvantages of a sole proprietorship? - Answers - - Owner is personally
liable for all debts (unlimited liability)
- Difficult to obtain outside financing (capital)
- Depend only on skills of owner (might be too specialized)
- Lack of Continuity
- No legal distinction between owner and business
- Restrictions on hiring members of owner's family including spouse and children under
19, under income tax regulations
- May be difficult to sell "goodwill" if reputation depends heavily on the personality of the
owner
- All profits are considered to be earned by the sole proprietor personally and are taxed
at full personal income tax rates
What is the definition of "Good will?" - Answers - The Value of the reputation, credibility,
and reliability that a business has built up over a period of time. It is an intangible factor,
and thus it is often very difficult to assign a financial value to it
What is a partnership? - Answers - When two or more people agree to operate a
business together, this agreement forms a contract between them known as the
Contract of Partnership
What is a Partnership Agreement? - Answers - Not required by law, it is a written
contract that reduces any potential future disagreements since the owners wrote down
the details of their business relationship here.
How do you start up a Partnership? - Answers - All partnerships are required to register
a Partnership Declaration that identifies the partners, the location, and the type of
business
Is transfer of ownership possible in Partnerships? - Answers - Yes, within limits: either
when one partner dies or wishes to cease doing business
, T/F: Each partner has unlimited, personal liability for the debts of their enterprise. -
Answers - True, partners are solidarily liable for the partnership debts (any one or more
of the partners may be required to pay all or part of any debt owed)
What should be included regarding the management of the enterprise in the Partnership
Agreement? - Answers - - How much time each partner will devote to the business
- What responsibilities each partner will have
- What happens if one of the partners becomes too ill to work in the business
What is the one arrangement of profits in a Partnership not allowable under the QCC? -
Answers - One which excludes a person from any share of the profits (a partner must
have some share in the profits, no matter how small)
In a Sole Proprietorship or Partnership, are you taxed on earnings reinvested into the
enterprise? - Answers - Yes, it is still considered personal earnings
How can a Partnership be terminated? - Answers - Being a relatively fragile form of
business:
- By the agreement of the partners
- By the bankruptcy of the business
- Upon the accomplishment of its objective
- Some by the death/bankruptcy of 1 partner
How does a limited partnership differ from a general partnership? - Answers - It differs
in the liability for debts and in the right to participate in the management of the business.
The special partners are liable for the debts only to the extent of a stipulated amount
they contributed, as stated in the partnership declaration. If not stated, they are soldarily
liable, just like the general partners.
How can a special partner check on the business? - Answers - They can meet
periodically with their partners to discuss the business, but cannot partake in any day-
to-day operations
What are the advantages of a partnership? - Answers - - Simple registration
- Inexpensive to start - under $50
- Profits shared only between partners
- Partners able to assist each other
- Partners pool their talents
- Quite flexible
- Simple to dissolve
- More scope for specialization
- Enjoyment of personal involvement
- Limited Partnership allows for some limitation in liability
What are the disadvantages of a partnership? - Answers - - Partners personally liable
for all debts and the liability is solidary
