Unit 8: WORKSHEETS

WORKSHEET 1Choosing a Legal Form of Ownership

Instructions: Referring to the readings and any personal experience you have had (or professional advice you have received), answer the questions which follow.

1. Rate each of the following factors as “V” (very important, “SI” (somewhat important) or “U” (unimportant) to you in your business:

i) Expense and complexity of registration and operationii) Ease of raising financingiii) Ease of future expansioniv) Ease of someday selling businessv) Ease of passing business to heirsvi) Protection of your personal assetsvii) Need for additional equityviii) Need for management helpix) Avoidance of government regulation

2. Given your knowledge so far, and your answers to question #1 (above), which legal form of organization will you choose?

3. Explain why you choose this particular form of ownership, referring to question #1 (above) for some possible reasons (Add this short write-up to your business plan):

Some of this worksheet information will become part of your business plan.

Some of this worksheet information will become part of your business plan.

WORKSHEET 2Selecting a Business Name

Instructions: Answer the questions below in the space provided, referring to the readings and web sites in Unit 3 of this module.

1. List the most important rules for business name selection.

2. Explain what a NUANS Report is and why you need such a report.

3. How can you check the uniqueness of your proposed business name prior to performing a NUANS?

4. For incorporated companies, there is an additional legal requirement for the name. What is it?

WORKSHEET 3The Incorporation Process

Instructions: Answer the questions below, referring to the readings and web sites in Unit 3, and obtaining other information from the various references identified in this module.

1. a) Assuming that you are choosing a corporate form of business,would you select federal or provincial incorporation?Federal Provincial Reasons for your choice:

b) May you carry on business in Manitoba if you are provincially incorporated in Ontario? (Remember, carrying on a business is different than having an office in a particular province.) Research and explain.

2. Assume that you have decided to incorporate your venture provincially. List the steps you would personally take to complete the incorporation process. (See the Incorporationand Business Guide for Ontario, in the SBRC or see the on-line information source in the box, "Steps to Incorporate", on page 14 of this module.)

3. List the costs associated with registering or incorporating your business(these will be included in your business plan).NOTE: Phone calls or Internet exploration may be necessary.

To Register: To Incorporate:

WORKSHEET 4The Partnership Agreement

Instructions: Even if your business is a proprietorship, you can complete this worksheet. Assume for the moment that you are starting a corporation or partnership. Fill in the information below, as though you were outlining the major provisions of your agreement. It is suggested that you use the sample partnership agreement or the sample shareholders agreement in the SBRC as a guide.

For each partner or shareholder:1. Name: 3. Name:

Address: Address:

2. Name: 4. Name:

Address: Address:

Date of Agreement:

Nature of Business:

Investment by each Partner or Shareholder:

Partner 1: $ Partner 3: $

Partner 2: $ Partner 4: $

Duties and Responsibilities of Each PartnerBe sure to explain who will be the "ultimate authority" in daily management decisions. Also, who will be responsible for marketing, operations, record-keeping, payroll, etc.

This worksheet information may become part of your business plan.This worksheet information may become part of your business plan.

WORKSHEET 4 (Cont'd)

Division of Profits and Losses

What share of profits/losses will each partner/shareholder have a right to?

Drawing Arrangements or Dividend Rights for Each Partner/ShareholderWhen, how and under what conditions may partners or shareholders remove money from the business? Remember that your business will not always have a strong cash flow!

WORKSHEET 4 (Cont'd)

Provisions for Withdrawal ofPartner(s)/Shareholder(s) or Termination of the BusinessHow will the value of a partner's or shareholder's share in the business be determined? What if the company is heavily indebted (will the remaining owner(s) have to pay off debt)? What if no remaining owners want to "buy out" an owner who wishes to withdraw?

Provisions for Adding a Partner/ShareholderHow is the decision reached on whether to add another business owner? Who decides? Will any new owners have to meet certain selection criteria? What will the required investment be, and what share of ownership will be given to a new partner or shareholder?

WORKSHEET 4 (Cont'd)*

Other Terms and Conditions(Obtain ideas from the sample partnership agreement or the sample shareholders agreement in the SBRC)

*NOTE: You may wish to alter Worksheet 4 if the space allowed does not suit your requirements, or to draw up your agreement on a separate page.

WORKSHEET 5The Shareholders' Agreement

Instructions: With reference to the readings in the publication, Incorporation & Business Guide for Ontario, answer the questions below. This publication may be found in the SBRC.

1. a) What are "pro rata rights and obligations"?

b) What is their purpose?

2. a) What is the "right of first refusal"?

b) Why is it important?

3. Why do the shares of a (closely held) private company with only a few owners have a limited market value?

WORKSHEET 5 (Cont'd)

4. a) What are buy-sell provisions, and what should they cover?

b) How is life insurance useful in relation to buy-sell provisions?

WORKSHEET 6Income Taxes and Small Business in Canada

Instructions: Answer the questions below by referring to Unit 2.4.2 of this module, and also Balderson, Chapter 13, "Tax Management".

1. a) What is the small business deductions?

b) Will the small business deduction apply to your business?

Yes No Why or Why Not?

2. What are the major differences between a corporation and the other 2 ownership forms regarding the calculation of taxable income?

a)

b)

3. List 2 tax advantages of each of the following forms of ownership:

a) Proprietorship: (i)

(ii)

b) Corporation: (i)

(ii)

Be sure to refer to SB101 Module 7, Insurance and Risk Management for more details and help in developing your risk management plan.

WORKSHEET 7

Planning for Risk Management

Instructions: Begin to identify the various risks which your business will face and to identify the types of insurance with which you will cover certain risks, by answering the questions below.

1. List the major risks which your business will face:

a)

b)

c)

d)

e)

2. List the major types of insurance required to cover your business risks:

This worksheet information will become part of your business plan.This worksheet information will become part of your business plan.