ddaWoodridge College

Soldiers’ Hills IV, Molino 6 Bacoor, Cavite

Differentiating the Forms of Business

Organizations and Giving examples of the forms
of Business Organization

Business Ethics and Social Responsibility

ABM 2
Reported by: John Fort Edwin E. Amora
Grade 12 ABM
Submitted to: Prof. Lester Concepcion
Second Semester
SY 2018-2019
 Differentiating the Forms of Business Organizations
Sole Proprietorship
A sole proprietorship, also known as a sole trader or a proprietorship, is an unincorporated business
with a single owner who pays personal income tax on profits earned from the business. With little
government regulation, a sole proprietorship is the simplest business to set up or take apart, making sole
proprietorships popular among individual self-contractors, consultants or small business owners. Many sole
proprietors do business under their own names because creating a separate business or trade name isn't
necessary.

Advantages:
• Easy to start
• No registration
• No profit sharing
• Easy decision-making
• Keep Secrets (business techniques)
• Complete Control
Disadvantages:
• Unlimited liability
• Employee benefits such as owner’s medical insurance premiums are not directly deductible from
business income (taxes)
• Raising funds
• Limited Life
• Loss in absence
Partnership
A partnership is a formal arrangement in which two or more parties cooperate to manage and
operate a business. Various partnership arrangements are possible in which all partners might share
liabilities and profits equally or some partners may have limited liability. Not every partner is necessarily
involved in the management and day-to-day operations of the venture, such as in the case of a "silent
partner." In some jurisdictions, partnerships enjoy favorable tax treatment relative to corporations.
General Partnership
A general partnership is a partnership with only general partners. Each general partner takes part
in the management of the business and also takes responsibility for the liabilities of the business. If one
partner is sued, all partners are held liable. General partnerships are the least desirable for this reason.
Limited Partnership
A limited partnership includes both general partners and limited partners. A limited partner does not
participate in the day-to-day management of the partnership and his/her liability is limited. In many cases,
the limited partners are merely investors who do not wish to participate in the partnership other than to
provide an investment and to receive a share of the profits.
Limited Liability Partnership
An LLP combines characteristics of partnerships and corporations. As in a corporation, all partners
in an LLP have limited liability, from errors, omissions, negligence, incompetence, or malpractice committed
by other partners or by employees. Of course, any partners involved in wrongful or negligent acts are still
personally liable, but other partners are protected from liability for those acts
Advantages:
• Relatively easy to start.
• The ability to raise funds.
• More skilled persons.
• Loss sharing.
• No loss in absence.

Disadvantages:
• Unlimited liability.
• Profit sharing.
• Conflicts
• Limited life.
• Transferability is
difficult.
Corporation
A corporation is a legal entity that is separate and distinct from its owners. Corporations enjoy most
of the rights and responsibilities that an individual possesses: enter contracts, loan and borrow money, sue
and be sued, hire employees, own assets and pay taxes. Some refer to it as a "legal person."
Advantages
• Limited Liability.
• Transfer of ownership by sale of stock.
• Easier to raise capital through shares & bonds.
• Continuity of existence.
• Benefits of large scale operation.
• Professional Management.
• Social Benefit.
Disadvantages
• Formation is not easy.
• Control by a Group.
• Many Legal Formalities.
• Excessive government control.
• Delay in Policy Decisions.
Limited Liability Company
A limited liability company is a corporate structure whereby the members of the company are not
personally liable for the company's debts or liabilities. Limited liability companies are hybrid entities that
combine the characteristics of a corporation and a partnership or sole proprietorship. While the limited
liability feature is similar to that of a corporation, the availability of flow-through taxation to the members of
an LLC is a feature of partnerships.
Advantages:
• Limited Liability.
• Tax Flexibility.
• Less Paperwork.
• Investment allocation flexibility.
• Freedom in management.
• Limitless ownership.
Disadvantages:
• Higher registration fees.
• Government regulation.
• Lack of case law.
• Limit on Building capital.
• Self-Employment Taxes
 Giving Examples of the Forms of Business Organization
Sole Proprietorship Businesses Examples
• Computer Repair Services
• Catering Company
• Housecleaning Service
• Tutoring
• Freelance Writer
• Traditional Convenience Stores

Partnership Business Examples

•
Corporations Businesses Examples
 References:
• https://www.quora.com/What-are-some-examples-of-a-limited-liability-company
• https://www.slideshare.net/Giratorio/forms-of-business-organizations
• https://www.slideshare.net/JaswinderSingh116/different-forms-of-business-organisations
• https://www.investopedia.com/terms/l/llc.asp
• https://www.investopedia.com/terms/s/soleproprietorship.asp
• https://www.investopedia.com/terms/p/partnership.asp
• https://www.investopedia.com/terms/c/corporation.asp
• https://smallbusiness.chron.com/10-examples-sole-proprietors-32858.html