Business

Organizations
AC 122
Week 2
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 Forms of Business Organizations
◺ Partnership
◺ Is a type of business organization that is an
association of at least two or more persons who
agree to place money, property or investment in a
common fund with the aim of profit sharing

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* Students to provide examples and discuss
 Business Start-up for a Partnership
◺ Register the business name with SEC
◺ Provide notarized Articles of Co-partnership and register
it with SEC
◺ Obtain a tax identification number for partnership from
BIR
◺ Obtain municipal license (business permit)
◺ Obtain the VAT or non-VAT number with the BIR
◺ Register with the BIR the books of accounts and the
business forms (sales invoices, O.R., delivery receipts, etc. 3
* Students to provide examples and discuss
Contents of Articles of Co-partnership
◺ Name of the partnership
◺ Names of the partners
◺ Place of business
◺ Effective date of the partnership
◺ Nature of business
◺ Investment of each partner
◺ Duration of the contract
◺ Rights, powers and duties of the
partners
◺ Accounting period
◺ Manner of dividing profits
◺ Liabilities of the partners for
partnership debts
◺ Compensation for services
offered by partners
◺ Treatment of partners additional
investments and withdrawals
◺ Procedures for settlement of
partners interest upon
dissolution of partnership
◺ Provision for settlement of
disputes 4
Forms of Business Organizations
◺ Types of partners
◺ Based on their contribution
■ Capitalist, Industrial and Capitalist-Industrial
◺ Based on their liability for partnership debts
■ General partner and limited partner

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Forms of Business Organizations
◺ Partnership positive effects
◺ Easy to form (add-ons of partnership agreement)
◺ Flexibility of operations (immediate decision-making)
◺ Efficiency in operations (two heads are better than
one)
◺ Possibility of bigger resources
◺ Great interest in the operations (smooth operations)
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Forms of Business Organizations
◺ Partnership negative effects
◺ Lack of stability (Dissolve or terminate contract due to
death, withdrawal, incapacity and etc.)
◺ Limited ability to raise capital
◺ Conflicts and quarrels (Decision-making, regulations,
responsibility, agreement, profit distribution, etc.)

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 Forms of Business Organizations
Corporation
◺ Owners (known as stockholders) have an undivided
ownership share in the assets of the corporation upon
its dissolution
◺ A share in its profits corresponding to the amount of
share stocks which they own

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* Students to provide examples and discuss
 Forms of Business Organizations
Top 10 Companies as of January 2020

* Students to provide examples and discuss 9

Business Start-up for a Corporation
◺ Verification of corporate name with SEC
◺ Drafting and execution of the Articles of Incorporation
◺ Deposit of cash for subscribed shares of stocks in a banking
institution
◺ Filing of the Articles of Incorporation
◺ Payment of filing and publication fees
◺ Issuance of SEC of the Certificate of Incorporation
◺ Obtain municipal license (business permit)
◺ Obtain the VAT or non-VAT number with the BIR
◺ Register with the BIR the books of accounts and accounting forms
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Contents of Articles of Incorporation
◺ Name of the corporation
◺ The specific purpose or purposes for which the corporation is being
formed
◺ The place where the principal office of the corporation is to be located
◺ The term for which the corporation is to exist
◺ Names, nationalities, and residence addresses of the incorporators
◺ The number of directors, which shall not be more than 15
◺ The names, nationalities, and residence addresses of persons who shall
act as directors or trustees
◺ If it be a stock corporation, the amount of its authorized capital stock,
number of shares, names, nationalities, and residence addresses of the
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original subscribers
Contents of By-Laws
◺ Article 1: Subscription, Issuance and transfer of shares
◺ Article 2: Meetings of Stockholders
◺ Article 3: Board of Directors
◺ Article 4: Officers
◺ Article 5: Offices
◺ Article 6: Offices (external auditor)
◺ Article 7: Corporate Seal
◺ Article 8: Amendments
◺ Article 9: Intentionally left blank page
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Advantages of Corporation
Limited liability: The shareholders of a corporation are only liable up to the
amount of their investments
Source of capital: A publicly-held corporation in particular can raise
substantial amounts by selling shares or issuing bonds
Ownership transfers: It is not especially difficult for a shareholder to sell
shares in a corporation
Perpetual life: There is no limit to the life of a corporation, since ownership of
it can pass through many generations of investors:
Pass through. If the corporation is structured as an S corporation, profits and
losses are passed through to the shareholders, so that the corporation does
not pay income taxes.
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Disadvantages of Corporation
Double taxation: it may pay taxes on its income, after which
shareholders pay taxes on any dividends received
Excessive tax filings: various types of income and other taxes
that must be paid can require a substantial amount of
paperwork.
Independent management: If there are many investors having
no clear majority interest, the management team of a
corporation can operate the business without any real oversight
from the owners.
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