Read the text below and answer the questions.

FORMS OF BUSINESS ORGANIZATION

If you are considering entering into a business or are involved with an existing business, there
are a number of different ways to structure your business. The most common types are sole
proprietorships, partnerships, joint venture, limited partnerships, limited liability partnerships and
corporations.
Sole Proprietorship. A sole proprietorship is the simplest form of business organization. The
sole proprietor owns the assets of the business and is personally responsible for all debts and obligations
of the business so personal assets can be seized to meet obligations and liabilities of the business. If the
proprietor uses a business name other than his or her own name then registration of the name will be
required with the Province. Partnership. Where two or more people combine their resources in a
business, their relationship will probably be considered a partnership and it is wise to prepare a
partnership agreement setting out the terms of the business. If partners do not enter into a formal
partnership agreement, their relationship will be governed by the Partnership Act.
A partnership agreement is important if there are only two partners because without an agreement, if
one partner dies then the partnership automatically dissolves.
Joint Venture. A joint venture is similar to a partnership but is generally limited to a single
project. It involves two or more parties combining their expertise, services and other resources for a
limited purpose and usually for a limited time. One advantage of a joint venture is the ability to
designate, by contract, differing levels of obligation and commitment between the parties and to
separate business interests both during the joint venture project and after its completion.
Limited Partnership. A limited partnership has one or more "general partners" and one or more
"limited partners". General partners have similar rights and obligations to partners in a non-limited
partnership. Limited partners are liable only for the amount equivalent to their contribution or promised
contribution to the capital of the business, provided that they do not participate in the management of
the business.
A limited partnership often requires a disclosure document to be filed to meet the requirements
of the Securities Act or the Real Estate Act, and always requires a limited partnership agreement signed
by all parties. For this reason, limited partnerships are used primarily for larger projects.
Limited Liability Partnership (LLP). Limited liability partnerships have the same advantages as
limited partnerships, with the added benefit that limited liability partners can take an active role in the
business of the partnership without exposing themselves to personal liability for the acts of the other
partners beyond the value of their investment in the partnership. However, they may still be liable for
their own actions or for the obligations of the LLP in certain situations.
Corporation. A corporation is a separate legal entity. It can sue and be sued in its own name,
hold property in its own name, and enter into contracts in its own name, including contracts with its
shareholders. A corporation can be more expensive to set up and maintain than other forms of business
organizations.

Adopted from: Pushor Michell. 2008. Form of business organization

Vocabulary lists in context:
completion (n) :state of being finished
disclosure (n) :secret that someone tells people, or the act of telling this
secret entity (n) :something that exists as a single and complete unit
expertise (n) :special skills or knowledge in a particular subject, that you
learn by experience or training
governed (v) :excercise political authority
obligations (n) :moral or legal duty to do
something
sole proprietorship (n) :unincorporated business with one owner who pays personal income tax
on profits from the business

Task 1
Find the underlined words or phrase in the text above whose meaning corresponds with the
following definitions.
1. A form of organization in which a partner has limited involvement in managing the
business and who is responsible for some of the partnership's debts, but only up to the
amount they invested when they first joined the partnership. (limited partnership)
2. A big company or a group of companies which works together as a single
organization ( sole proprietorship (n) )
3. A relationship between two people, organizations, or countries work ing together regularly
in which all of the partners are responsible for a limited amount of the partnership's debts,
not all of the debts ( partnership )
4. A business project managed by two, more people or companies which are working
together ( joint venture )
5. A company or business that is owned by only one person ( sole proprietorship (n) )
6. Business owned by two or more partners who share the profits and
losses ( joint venture )

Task 2
Fill in the blank with characters related to the definition on the right side.
1. PARTNER one of the owners of a business, who shares the
profits and losses
2. BUSINESS activity of buying or selling goods and ser vices,
done by companies
3. COMITMENT promise to do something or to behave in a
particular way
4. AGREEMENT arrangement of promise to do something, made by
two companies, governments, organizations, etc.
5. OBLIGATION moral or legal duty to do something
Task 3
Answer the following questions based on the above text.
1. Mention some forms of organization.
- Partnerships
- Corporations
- Sole proprietorship
- Limited liability company

2. What is the difference between limited partnership and limited liability partnership?
- Limited partners are liable only for the amount equivalent to their contribution or promised
contribution to the capital of the business, provided that they do not participate in the management
of the business and limited partnerships are used primarily for larger projects whereas Limited
liability partnerships have the same advantages as limited partnerships, with the added benefit that
limited liability partners can take an active role in the business of the partnership without exposing
themselves to personal liability for the acts of the other partners beyond the value of their
investment in the partnership.

3. What is the advantage of joint adventure?

- One advantage of a joint venture is the ability to designate, by contract, differing levels of
obligation and commitment between the parties and to separate business interests both during the
joint venture project and after its completion.

4. What is the function of Securities Act and the Real Estate Act?
- For agreement signed by all parties.

5. What is the difference between general and limited partners?

- The general partner oversees and runs the business while limited partners do not partake in
managing the business. However, the general partner of a limited partnership has unlimited liability
for the debt, and any limited partners have limited liability up to the amount of their investment.
Task 4
Describe each of the five forms of organization below by completing the following mind mapping.

 Sole proprietorship
- Member : a business owned by one person
- Agreement : Sole proprietors don't need operating agreements

 Partnership
- Member : a business owned by two or more people who share its risks and rewards
- Agreement : A partnership agreement is the legal document that dictates the way a business
is run and details the relationship between each partner.
 Joint venture
- Member : is a business arrangement in which two or more parties agree to pool their
 resources for the purpose of accomplishing a specific task.
- Agreement : usually concerns a single legal person owned by two or more persons, while a
joint venture agreement covers a short-term project between several parties

 Limited partnership
- Member : A limited partnership has one or more "general partners" and one or more "limited
partners".
- Agreement: often requires a disclosure document to be filed to meet the requirements of the
Securities Act or the Real Estate Act, and always requires a limited partnership agreement
signed by all parties.

 Corporation
- Member :a company that is registered by a state and operates apart from its owners
- Agreement : To form a corporation, the owners must get a corporate charter from the state
where their main office will be located.