The Nature and Forms of Business Organization 

Business may be defined as profit-seeking activities and enterprises that provide goods and
services necessary to an economic system. Profits refer to the rewards for businesspersons who take the
risk involved in producing and marketing goods and services. A business firm is established primarily for
profit. There are reasons, however, why anyone would want to start a business. Some of these are to do
work that is enjoyable, to do something for pleasure and pride, and to achieve financial independence.
Professional managers maintain that a business firm should achieve the following objectives:
1. Creation and distribution of a product or service.
2. Satisfaction of personal objectives like profits for owners, salaries and other compensation for
executives, wages and other compensation for employees, psychic income for all, including pride
in work, security, recognition, and acceptance.
3. Protection and enhancement of the human and physical resources; and
4. Economy and effectiveness of operation.

Kinds of Business Organization (Activity) 

1 ​Service Business​ is a type of business that provides labor and intangible benefits to customers.
Examples are transportation companies, professional services, entertainment, hotels and restaurants,
apartments, and banks.
2. ​Merchandising Business is a type of business that purchases products from other businesses like
manufacturers and sells them to customers at a higher retail price.
Examples are grocery stores, supermarkets, car dealers, real estate dealers, and electronics stores.
3 ​Manufacturing Business is a type of business where raw materials are transformed into finished goods
through product-processing, labor, and other manufacturing processes.
Examples are manufacturers of soap and detergent, canned goods, automobiles, and medical drugs
 
 
 
 
 
 
 Forms of Business Organization (Ownership) 

​ ole​ Proprietorship​ is a type of business entity owned and operated by a single person. Sole proprietor
S
owns the entire business, including all assets and profits, also responsible for all the liabilities of the
business. Sole proprietors are also considered single taxpayers and are assigned a single Tax
Identification Number (TIN). Owners also apply for a business trade name and register it with the
Department of Trade and Industry (DTI).

Advantages  Disadvantages 

Ease and Cost of Formation Owner’s Lack of Ability and Experience

Secrecy Difficulty in Attracting Good Employees
Distribution and Use of Profits Difficulty in Raising Funds
Control of the Business Limited Life
Government Regulation Unlimited Liability
Taxation
Closing the Business

Partnership​. ​ARTICLE 1767. By the contract of partnership two or more persons bind themselves to
contribute money, property, or industry to a common fund, with the intention of dividing the profits among
themselves. ​A partnership can be a general or limited partnership. General partnership is a form of
partnership wherein the partners have unlimited liability for debts and obligations of the partnership. Limited
partnership is a form of partnership wherein one or more general partners have unlimited liability and
limited partners have liability that is only up to the extent of their capital contributions. Partnership with a
capital of more than three thousand pesos should register with the Securities and Exchange Commission
(SEC).
Advantages  Disadvantages 
Ease of Formation Unlimited Liability
Pooling of knowledge and Skills Limited Life
More Funds Available Potential Conflicts
Ability to Attract and Retain Employees Difficulty in Dissolving the Business
Tax Advantage
Corporation is an artificial being created by operation of law, having the right of succession and the
powers, attributes, and properties expressly authorized by law or incidental to its existence. A corporation
has a minimum of 5 and maximum of 15 owners called shareholders. The shareholders are assigned at
least one share of the company. Their liability is only up to the extent of their share capital. The minimum
paid-up capital required of corporations in the Philippines is 5,000. There are two types of corporation:
Stock and Non-stock corporation. Stock corporation has capital stock divided into shares and dividends.
Surplus profits are given to shareholders depending on the number of shares held. Non-stock corporations
do not issue shares of stock and are established primarily for public interest such as foundation, education,
social, cultural, and other similar purposes.

Advantages  Disadvantages 
Limited Liability More Expensive and Complicated to Organize
Ease of Expansion Double Taxation
Ease of Transferring Ownership More Extensive Government Restriction and Reporting
Requirements
Relatively Long Life Employees Lack Personal identification With and
Commitment to Corporate Goals
Greater Ability to Hire Specialized Management

The Role of Business Organization in Socio-economic Development 

The role of business in social and economic development cannot be overstated. Business plays a
vital role in the economic development and wealth of a country. Success in business translates to the
economic well-being of a company and its residents through job creation and offering improved quality of
life for the country’s citizens.
Visit the link below to further enhance your knowledge about the role of business organization in
socio-economic development.
Source: ​https://bizfluent.com/list-6706424-major-factors-influencing-economic-growth.html