[Type text]
FORMS OF BUSINESS
ORGANIZATIONS
A. Sole Proprietorship
- Sole trader/Proprietorship
- Initiated, organized, owned or
capitalized, and managed by a single
person
Advantages VS
--- Easily Created and
Terminated: can be
brought into
existence without
any formalities and is
easily terminated
--- Direct, undiluted
action: ownership,
control, and
management are
vested in one person
--- Effort-Reward
Relationship: rewards
that result from the
effort made by the
owner goes to the
owner
--- Flexible, Personal
Touch
--- Minimum of
regulation and
Taxation: due to lack
of government
involvement
B. Partnership
- By the contract of partnership, two or
more persons bind them to contribute
money, property or industry to a
common fund with the intention of
dividing the profits among themselves
Type of
Function
Partner
shares ownership and management
of the business, and is liable to the
General
Disadvantages extent of his separate property after
Partner
--- Unlimited liability: all the assets of the partnership are
owners must be exhausted
prepared to satisfy partners with limited financial
business debts with liability and they do not take active
their own personal Limited
role in the management of the firm;
assets if the business Partners
liable only to the extent of his capital
is unable to meet its contribution
obligations do not take active participation in the
Silent operation of the business, but they
--- Capital limitations: Partners are generally known to be partners
equity capital is of the business
limited to the assets of neither active in the partnership nor
the owner; this can be Dominant
they are generally known to be
a serious restriction on Partner
associated with the business
growth and expansion Capitalist contributes money or property to the
Partner common fund of the partnership
--- Perils of individual: Managing designated to manage the operations
if the owner dies or Partner of the business of the partnership
becomes seriously ill, Industrial contributes his knowledge or
the business is Partner personal services to the partnership
immediately takes active part in the business, but
jeopardized Secret
is not known to be a partner by
Partner
outside parties
--- Limited skills and Nominal
capabilities of the sole Partner or actually not a partner, but is held out
owner: the skills that Partner by or represented as a partner
can benefit the Estoppel
business are limited to designated to wind up or settle the
the skills and Liquidating
affairs of the partnership after
capabilities of the Partner
dissolution
owner, which might
not be enough for the
demands of the
business
Advantages VS Disadvantages
[Type text]

--- Pooling of --- Unlimited Liability: - Artificial being, Invisible, Intangible

Resources: all the partners are - Exists only in the contemplation of law
partnership is useful liable for the actions
- Its owners are the stockholders who
in bringing together of each other
can sell their interests in the
two or more persons
corporation without affecting the
who, as a group, --- Tenuous Existence:
continuity of its operations because
have more business the partnership is
the life of the corporation is
potential than as subject to many
dependent or distinct from that of the
individuals; ideas, eventualities that may
owners or stockholders
managerial talent, terminate or disrupt
money, and fixed its operation; it may
assets are frequently be terminated by the Advantages VS Disadvantages
combined to produce death, insanity, or --- Limited Liability: --- Legal Formality and
a successful business incapacity of a liability of a Cost: creating a
partner; serious stockholder is limited corporation may
--- Ability to Obtain disagreements may be to the amount require considerable
Capital: combined insoluble invested in the stock time, effort, and
financial resources of expense; the
all the partners stand --- Independence on --- Legal Entity: the corporation is subject
behind the Management corporation is a legal to considerably more
negotiations for Harmony and entity; it may own control and more
business borrowing Coordination: the property, but is not exacting compliance
equality of partners is affected by the death with regulations than
--- Rewards and simple in theory, but or withdrawal of its proprietorship or
Incentives: each sometimes more stockholders, and is partnership
partner is motivated difficult in practice; entitled to due
by knowing that the partners may not process and equal --- Cost and Time
success of the agree on certain protection under the Involved in the
partnership is in part matters, or division of Fourteenth Incorporation Process:
due to his or her own work assignments may Amendment of the in view of the
efforts; encourages prove awkward Constitution relatively large
the partner to place number of persons
the success of the --- Problems in Share --- Ready involved in forming a
business above their Liquidation: a Transferability of corporation, the cost
own self- interest partner’s share is not Ownership: the involved and the time
easily disposed of shares of stocks can requirement for the
--- Limited Regulation except by agreement be sold or transferred formation or
and Taxation: a with the other at will incorporation
partnership, much partners; attempting registration process is
like a proprietorship, to dispose of a share somewhat longer and
is subject to a to an outsider without difficult
minimum amount of proper valuation can
regulation, and the be a problem
partners are taxed on
their own individual
incomes
C.Corporation
[Type text]

- Republic Act 6938 – Cooperative Code

--- Obtaining Capital: --- Taxation: the of the Philippines
forming a new nature of a - A duly registered association of
corporation with a corporation is subject person, with a common bond of
salable idea can to certain tax interest, who have voluntarily joined
provide opportunities regulations, which is together to achieve a lawful common
to sell stock to a more costly from the social or economic end, making
variety of investors; a viewpoint of both equitable contributions to the capital
corporation that has national income tax required, and accepting a fair share of
achieved some and local government the risks and benefits of the
stability can usually tax rules undertaking in accordance with
bargain more universally accepted cooperative
effectively for a --- Potential Loss of principles
substantial amount Control by Founders
of capital than either of the Corporation: Principles of
a proprietorship or the nature of the Content
Cooperative
partnership corporation, as well as membership is open to all
the boundary Open and
individuals, regardless of their
--- Employee between the powers Voluntary
social, political, racial, or religious
Benefits: the of the Membership
background or beliefs
corporation has a owners/founders and affairs of the organization are
better chance to managers of the administered by personnel elected
create incentives for business, may pose as or appointed in accordance with
employees; stock a constraint and Democratic their approved Constitution and
ownership, bonuses, threat to the founders Control By-laws; members of the primary
pension plans, or stockholders of the cooperatives have equal voting
insurance programs, corporation rights irrespective of the number of
and other fringe their capital share of stock
benefits and the tax Limited
advantages that shared capital receives strictly
Interest on
accompany such limited rate of interest
Capital
programs are more
net surplus arising out of the
easily provided by
operations of cooperative belongs
the corporate form of
to its members and shall be
organization
equitably distributed for
Division on cooperative development common
Net Surplus services, individual reserved fund,
and for limited interest on capital
and/or patronage refund, as
specified in the Articles of
Incorporation and By-laws

D. Cooperatives
[Type text]

all cooperatives are mandated to TYPES OF BUSINESS

make provision for the education of
Cooperative their members, officers, I. Service Business
Education employees, and of the general - Generates income by providing services
public based on the principles of for a fee
the cooperatives - Service type firms offer professional
all cooperatives, in order to best skills, expertise, advice, and other
serve the interest of their members similar services.
Cooperation
and communities, have to actively - Massage, Legal Consultation,
Among
cooperate with other cooperatives Accounting
Cooperatives
at local, national, and international
levels II. Merchandising Business
- Buying and selling of goods
Advantages VS Disadvantages - This type of business buys products at
--- Tax Privileges: in --- Inequality of Profit wholesale price and sells the same at
some government- Distribution: profits retail price.
sponsored projects, are distributed - They are known as "buy and sell"
the cooperative according to the businesses.
usually receives number of stocks; the - They make profit by selling the products
subsidy and other enterprising or at prices higher than their purchase
forms of privileges entrepreneurial costs.
directed at its member of the - A merchandising business sells a
members cooperative who product without changing its form.
spent much effort will - Grocery Stores
--- Ability to Provide in turn receive
Direct Benefits to its relatively lesser III. Manufacturing Business
Members: and the rewards as compared - A manufacturing business combines raw
entire community it to the rest materials, labor, and factory overhead
serves in the form of in its production process. The
relatively cheaper --- The Pro-Masses or manufactured goods will then be sold to
products and services Pro-Poor Bias of the customers.
consistent with its Cooperatives Appears
mission of providing Diametrically Opposed
services, rather than to: the entrepreneurs’
existence for purely idea of servicing a
profit motives market niche that is
well-off enough to
--- Lower Cost address its dream of
profit
--- Further Marketing
Research --- Big Investors Don’t
Get Much Attracted
--- Democratic
Organization