FORMS OF BUSINESS

ORGANIZATIONS
There are three forms of business organizations based on
ownership structure. These are sole proprietorship, partnership
and corporation.

I. SOLE PROPRIETORSHIP
Sole proprietorship are companies owned by one person who
is usually hands-on in managing the day-to-day activities. Sole
proprietorship owns entire business, including all assets and
profits.

Assets are resources with economic value that are owned and
controlled by the business owners.

Examples: facilities, equipment,machinery, cash, office supplies

and raw materials.

Liabilities are debts or obligations which arise in the course

of the business operations.

ADVANTAGES DISADVANTAGES
Most manageable Unlimited liability

Least expensive form of

ownership
II. PARTNERSHIP
Partnership is a form of business organizations where
ownership of the business is shared by two or more members.
The partners mutually agree as to how decisions will be made
and how the profits and losses will be shared. A partnership can
either be a general partnership or a limited partnership

General partnership- is a form of partnership wherein the

partners have unlimited liability for the debts and obligations of
the partnership

Limited partnership- is a form of partnership wherein one or

more general partners have unlimited liability and the limited
partners have liability that is only up to the amount equal to their
capital contributions.

Partnerships with a capital of more the three thousand pesos

(P3,000.00) should register with SEC. Income tax computations
for partnership are the same with the corporation.

ADVANTAGES DISADVANTAGES
Wider capital base Jointly liable for all the
obligations
Effects stemming from the
decisions of the other partner
III. CORPORATION
A corporation hase a distinct personality separate from it’s
owners. A corporation has a minimum of five and a maximum
of fifteen owners who are calles shareholders.
A shareholder, also referred to as a stockholder, is any person,
company, or institution that owns at least one share of a
company's stock

There are two types of corporation. These are as follow:

A stock corporation has capital stock divided into shares and

dividends. Surplus profits are given to shareholders depending
on the number of shares held.

A non-stock corporation does not issue shares of stock and is

established primarily for public interests such as a foundation
for charitable, educational, social, cultural and other similar
purposes.

ADVANTAGES DISADVANTAGES
Limited liability Double taxation

Deduct benifits it provides to Independent management

it’s employees and consider
them as expenses
General stability