Seneca College of Applied Arts and Technology
ASSIGNMENT # 3
subject: legal aspects of fraud
Subject code: FAC 744 AA
Semester – 1
Submitted to: Bill Thoms (Instructor)
Submitted by: Navjot Jaswal
Question 1: What are the main advantages and disadvantages associated with operating a sole proprietorship?
Answer: A sole proprietorship is a firm owned and operated by a single individual without creating another form of business organization. Some of the characteristics of sole proprietorship are listed below:
* It is the most common form of business.
* Its inception is informal and it is the most simplest of the legal forms of the organization.
* It is difficult to differentiate the business enterprise from the personal activities of the proprietor.
* The proprietor has complete control of the business activities.
* The capital of the business belongs to the proprietor so do the profits.
* The proprietor is personally liable for all the debts of the business.
* No legal formalities are required to establish or wind up.
* The proprietor do not need to consult anyone and can act promptly in emergencies.
* The proprietor secures the entire profits or losses so that nothing obscures his or her sole personal responsibility for the activities of the enterprise.
* The difficulty of raising capital may force the proprietor to operate on too small a scale for efficient operations.
* The proprietor acting alone does not have the assistance of counsel or business associates in meeting his or her business problems.
* The proprietor must bear business’s losses. If the business assets do not cover losses, he /she must use personal assets to make them good or face bankruptcy.
* The proprietor pays personal income taxes as graduated rates on the full amount of the earnings of the business, regardless to whether he /she withdraws the full amount of leaves some of the earnings in the...