FORMS OF

BUSINESS
ORGANIZATIONS
SINGLE OR SOLE PROPRIETORSHIP
• As the business
expands and
becomes more
successful,
certain
demands might
call for its
conversion into
the more
complex forms
of business
organizations.
Advantages of Single
or Sole Proprietorship
1. It has minimal cost.
2. There are no specific and
strict laws that define
and delineate the
policies.
3. It is the easiest to set up.
4. All the profits and
business decisions are
entirely under the
owner’s discretion
Main Disadvantage of
Single or Sole
Proprietorship
The owners have “unlimited
liability”
Prof. Karen Collins: principle of
unlimited personal liability
– “if the company incurs a
debt or suffers a
catastrophe, the owner is
personally liable”
• The
single-proprietor
business must be
registered under the
Department of
Trade and Industry
(DTI) and the
Bureau of Trade
Regulation and
Consumer
Protection (BTRCP).
 • A business classified as a
Partnership partnership does not mean
PARTNERSHIP
that there are two owners
since it may have more than
two.
 Article 1767
The contract of
partnership happens when
“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.”
 Article 1770
“A partnership must
have a lawful object
or purpose, and must
be established for the
common benefit or
interest of the
partners.”
• Note that “two or more persons may
also form a partnership for the exercise
of a profession”
• Partnership with a capital of PHP 3,000.00 or
more must be listed under the Securities and
Exchange Commission (SEC).
• Even prior to
registration, a
business
partnership has
already
attained the
judicial
personality
status.
 Article 1797

• The losses and

profits shall be
distributed in
conformity
with the
agreement.
 Article 1797
In the absence of
stipulation, the share of
each partner in the
profits and losses shall
be in proportion to what
he may have
contributed, but the
industrial partner shall
not be liable for the
losses.
 • Any agreement among the
partners that denies one a portion
Article 1797 in the profits and losses must be
considered as null and void.
 Common
Ethical Issues
• Breach of
partnership
agreement
• Management
issues
CORPORATION
 Corporation
Corporation is defined as
“an artificial being created
by operation of law, having
the right of succession and
the powers, attributes, and
properties expressly
authorized by law or
incident to its existence.”
R.A. 11232
• Note that the separate
existence or the juridical
personality of a corporation
formally begins on the very
date that the SEC releases a
certificate of incorporation.
 Three Main
Advantages of
Corporation
1. Limited liability
2. Financial
resources
3. Continuity
 • The owners of a corporation
Limited have limited liability since they
can only lose as much as the
liability amount that they put at stake
in their business.
 Financial
resources
• A corporation
can start
selling stocks
or can easily
borrow
money from
financial
institutions in
case of limited
funds.
A corporation
can outlast its
individual
owners because
of its separate
juridical
identity.

Continuity
• Note that foreigners may also invest in the
Philippines or may even own a business
organizations but with definite restrictions
and limitations.
 “The higher the
buildings, the
lower the morals.”
- Noel Coward
 Ethical Issues and
Political Issues
1. Tax fraud
2. Irregular accounting
practices
3. Bribery involving top
government officials
4. Wasteful personal
spending of company
profits
5. Rights of workers
COOPERATIVES
•The idea of
cooperative can
be traced back to
as early as
Thomas More’s
notion of Utopia
and the
foundation of
Commonwealth
during the
English Civil War.
Rochdale Society of Equitable
Pioneers
• It is defined as “an autonomous
and duly registered association
of persons, with a common
bond of interest, who have
voluntarily joined together to
achieve their social, economic,
and cultural needs and
aspirations by making equitable
contributions to the capital
required, patronizing their
products and services and
accepting a fair share of the
risks and benefits of the
undertaking in accordance with
universally accepted cooperative
principles.”
 Most Common
Types of
Cooperatives
1. Credit Cooperative
2. Consumers
Cooperative
3. Producers
Cooperative
4. Electric Cooperative
 1. Voluntary and open
membership
2. Democratic member control
Fundamental 3. Economic participation
Principles of a 4. Autonomy and
Cooperative independence
5. Education, training, and
information
6. Cooperation among
cooperative members
7. Concern for community
 •“Cooperatives can
be highly
instrumental in
enabling and
empowering women
and men to seize the
opportunities
created by
globalization, and in
providing a buffer
against its
downside."
 • A cooperative is still an
organization of people
Ethical who are not just
motivated by
Issues
cooperation and
and interdependence but
Conflicts also by the narrow
pursuit of profit and
personal interest.
Robert Owen and Charles Fourier
• They “promoted
cooperative
principles as a more
humane alternative
to the greed and
competition fostered
by capitalism.”