CHAPTER 2

ORGANIZING A BUSINESS:FORMS OF ORGANIZATION

Many individuals would want to go into business on their own but are hesitant to do so.
Oftentimes, they start small and gradually improve operations and consequently, their financial
position. However, the longer one engages in business, the more he realizes that there are greater
opportunities for growth and profit. They may be beyond his limitations so that he opts to modify
the type of his organization.

Entrepreneurships
Refers to an individual’s undertaking whereby he invest his money in a business
which he manages.
Promotion
Refers to the activities involved in making a business ready to operate. Individuals
who undertake the activities in organizing a business until it become operational are called
promoters.
Discovery
Refers to finding business opportunity and conducting investigation to determine
whether it should be undertaken or not.
Financing
This stage of promotion refers to procurements of the initial capital that the proposal
business requires to be able to operate profitably.

Assembling
This stage is where all the factors required for viable business operations are made
available in their optimum combination. In other words, it is where actual organization takes
place.

Project feasibility studies

A project feasibility study is a through and systematic analysis of all factors to
ascertain the variability of an undertaking. It gives the capsule view of the whole project by
presenting its highlights, descriptive definition, long-range objectives, feasibility criteria,
history and basic assumptions.

Major Parts pf the Feasibility Report

a. Marketing = include the research made on actual and potential demand for the product,
competition, selling price and marketing plans
b. Organization and management= cover the type or form of business organization and division
of functions within the organization.
c. Technical = should delve on the manufacturing process, operating requirements, plant
capacity, plant lay out, etc.
d. taxation = tax implications and tax saving measures.
e. Legal = legality in business
f. Financing = refers to money involvement.
g. Financial aspects = include determination of the financing requirements, sources of financing,
and cost of capital.
h. Social and economic benefits = are presented to show the relevance of the project under
study in relation to the plans of the government in the particular region, the benefits that
may be derived directly or indirectly by the community and other business establishments,
and the possible effects on our national economy.

FINANCIAL ASPECTS OF PROJECT FEASIBILITY STUDIES, FINANCIAL MANAGERS’

ROLE THEREIN
Finance manager are primarily involved in the financial aspects of a project feasibility
study. The financial aspects should include the following.
a. Statement of major assumptions
b. Projected financial statements and supporting computations.
c. Analysis of financial statements.

FORMS OF BUSINESS ORGANIZATIONS

A business organization may be in the form of sole proprietorship, partnership or

corporation.

Sole Proprietorship is a form of organization where there is only one owner, the
proprietor.

Partnership is an association of two or more persons who bind themselves to

contribute money, property, or industry to a common fund, with the intention of dividing
profits among themselves.

Corporation is 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.

Sole Proprietorship
Many small businesses in the Philippines are stated as sole proprietorships. This is
often due to the desire of an individual who is going into business for the first time, to do
it on his own first while learning the trade. After operating for some time, he invites or
get invited to form a partnership or a corporation.

ORGANIZING A SOLE PROPRIETORSHIP

The following is the procedure followed in organizing a sole proprietorship:

1. Register the business name with the Bureau of Domestic Trade.
2. Pay the municipal licenses to the local government.
3. Apply for VAT or non-VAT number
4. Register with the BIR the books of accounts (simplified bookkeeping records or
journals and ledger) and the business forms to be used (sales invoices, cash sales
invoices, official receipts, etc.)