Forms of Business Organization 8.

Rights, powers, and duties of the

partners
Sole Proprietorship – Form of organization 9. Accounting period
where there is only one owner, the 10. Manner of dividing profits and losses
proprietor. 11. Liabilities of the partners for
Partnership – two or more persons who partnership debts
binds themselves to contribute money, 12. Compensation for services offered
property, or industry to a common fund, by partners
with the intention of dividing the profit 13. Treatment of partners’ additional
among themselves. investments and withdrawals
Corporation – an artificial being created by 14. Procedure for settlement of partners’
the operation of law, having the right of interest upon dissolution of
succession and the powers, attributes and partnership
properties expressly authorized by law 15. Provision for settlement of disputes
or incident to its existence.
Characteristics
Partnerships
1. Mutual Contribution
Procedure in Organizing a Partnership 2. Division of Profit and Loss
3. Co-Ownership of Contributed Assets
- Register the business name with the 4. Mutual Agency
Bureau of Domestic Trade. 5. Limited Life
- Have the partnership agreement be 6. Unlimited Liability
notarized.
- Obtain a tax account number for the Classification of Partnerships
partnership from the BIR.
- Register with SEC. As to object
- Obtain the municipal licenses from
local government. a. Universal Partnership
- Apply for VAT or non-VAT. b. Particular Partnership
- Register with the BIR the books of
accounts and the business forms to As to liability
be used.
a. General Partnership
Partnership Contract / Articles of Co- b. Limited Partnership
Partnership
As to legality of existence
1. Name of the partnership
2. Names of the partners a. De Facto Partnership
3. Place of business b. De Jure Partnership
4. Effective date of the partnership
5. Nature of business As to duration
6. Investment of each partner and
corresponding capital credit a. Partnership at Will
7. Duration of the contract b. Partnership with a Fixed Term
Classes of Partners

As to contributions

a. Capitalist Partner
b. Industrial Partner
c. Capitalist-industrial Partner

As to liability

a. General Partner
b. Limited Partner

As to management

a. Managing Partner
b. Silent Partner

Other classes of partners

a. Secret Partner
b. Nominal Partner
c. Liquidating Partner

Advantages

1. It is easy to form. (compared to

Corporation)
2. Suited to the practice of profession.
3. Flexibility of operation.
4. More capital and better decision
arrived at. (Compared to Sole
Propietorship)
5. Good credit standing

Disadvantages

1. Unlimited liability of the partners.

2. Limited life.
3. Limited ability to raise capital