Aprilyn L.

Dayday

John Delos Santos

BS1 Final Activity

1. What are the forms of ownership and briefly explain each.

There are major and minor forms of ownership. The major ownership are; Sole
Proprietorship, Partnership and Corporation. The first is Sole proprietorship (also known as
individual entrepreneurship, sole trader, or simply proprietorship)is a type of unincorporated
entity that is owned by one individual only. It is the simplest legal form of a business entity.
Unlike the partnerships or corporations, a sole proprietorship does not create a separate legal
entity from the owner. In other words, the identity of the owner or the sole proprietor coincides
with the business entity. Because of this fact, the owner of the entity is fully liable for any and all
the liabilities incurred by the business.
The simplicity of a sole proprietorship makes this form of business structure extremely
popular among small businesses, freelancers, and other self-employed individuals. What begins
as a sole proprietorship may be transformed into another, more complex business structure,
such as a corporation, if the business grows substantially and begins hiring a sizeable number of
employees.
The second major forms of ownership is partnership a partnership is a type of
where two or more people establish and run a business together. There are two types of
partnerships: General Partnerships (GP), Limited Partnerships (LP)
One of the biggest benefits of this business arrangement is that it is a flow-
through entity. Therefore, any income generated in a partnership is treated as the personal
income of the partners. This means it is only taxed once. In contrast, owners of a corporation
face double-taxation. This is because the corporation’s income is taxed once, and then the
owner’s personal income is taxed again.
As mentioned above there are two types of partnership. They are as follows;
General Partner: a partner that holds management responsibility. They are responsible
for the operations of the business. Furthermore, general partners face unlimited liability – they
are fully liable for the debts of the business. This means that their personal assets can be seized
to settle debt obligations or lawsuits.
Limited Partner: a partner with a financial stake in the business but no management
responsibilities. Therefore, limited partners cannot be held personally liable for the debts of the
business, as they do not actively manage it. The most a limited partner can lose is their
investment in the business. Essentially, limited partners are most like shareholders of a
corporation.
The third major of business ownership is corporation is a legal entity created by
individuals, stockholders, or shareholders, with the purpose of operating for profit. Corporations
are allowed to enter into contracts, sue and be sued, own assets, remit federal and state taxes,
and borrow money from financial institutions. The creation of a corporation involves a legal
process called incorporation where legal documents containing the primary purpose of the
business, name and location, and the number of shares and types of stock issued, are
drafted.The process of incorporation gives the business entity a distinct feature that protects its
owners from being personally liable in the event of a lawsuit or legal claim.

The minor forms of business ownership consist of joint stock company, the joint
venture, and the business trust. Minor forms of business organization consist of the following.
First the joint stock company joint-stock company is a business that is owned by its
investors. The shareholders buy and sell shares and own a portion of the company. The
percentage of ownership is based on the number of shares that each individual owns.
Shareholders can buy and sell shares and transfer shares between one another, without putting
the continued existence of the company in jeopardy.Joint-stock companies are generally formed
to enable a company to thrive. If only a few shareholders participated, the company wouldn’t be
able to fund itself. But by banding together, the individuals make it possible to build a thriving
business, with each shareholder then expecting to profit from the company’s success. Each
member gives and each member takes.
Second minor forms of business ownership is The joint venture  joint venture is a
combination of two or more parties that seek the development of a single enterprise or project
for profit, sharing the risks associated with its development. The parties to the joint venture
must be at least a combination of two natural persons or entities. The parties may contribute
capital, labor, assets, skill, experience, knowledge, or other resources useful for the single
enterprise or project. A joint venture is not a partnership or a corporation, although some legal
aspects of a joint venture such as income tax treatment may be ruled by partnership laws.Joint
ventures are widely used to gain entrance into foreign markets. Foreign entities form joint
koventures with domestic entities already present in markets the foreign entities would like to
enter. For example, the foreign entity may bring new technologies or business practices into the
joint venture, while the domestic entity already has commercial relationships and requisite
governmental documents within the country, along with being entrenched in the domestic
industry.
Third minor is the business trust the business trust It is a legal form of organization in
which a trustee is appointed to manage the business and it's operations through a trustee
relationship. Under the task management the owners of property, securities, or other assets
convey this to a trustee in a change for transferable trust certificates. The certificates entitled
the owners to participate in the profits of the operation however the liability is transferred to
the trustee
2. Why is a corporation is expensive and complicated to organize?
Among the three major forms of ownership the corporation is more time and money are
required to organize. It takes months or even years before a corporation can begin serving its
customers it may start to patients only after receiving a certificate of incorporation corporation
from the Securities and Exchange Commission.
3. What is a double taxation?
Double Taxation is the profits derived by stockholders are taxed twice by the government. First,
when the corporation realizes profits, and second, when individual stockholders declare the
dividends they receive from the corporation as part of their personal income. This disadvantage
is not present in sole proprietorships and partnerships. Double taxation refers to the imposition
of taxes on the same income, assets or financial transaction at two different points of time.
Double taxation can be economic, which refers to the taxing of shareholder dividends after
taxation as corporate earnings. This type of situation means that the benefit realized by a
company is subject to double taxation. Double taxation can also be legal, which means that two
countries would consider that a single person is a tax resident. Therefore, taxes on income are
imposed by one country, after the same income has already been taxed by another country.
However, many countries have signed treaties to prevent this form of double taxation from
occurring to foreign corporations. International conventions aim to determine which country
the individual must pay and create mechanisms for the elimination of double taxation.

4. Why is it easy to dissolve a business with the sole proprietorship?

It easy to dissolve a business with the sole proprietorship because a sole proprietorship is a
single-person business entity. Sole proprietorships are the most basic business structures to
establish and are equally straightforward to dissolve if you cover the basic steps necessary to
close the business. Because sole proprietorships generally do not require formal state
registration, dissolving the business involves paying debts, closing creditor accounts and
ensuring records are maintained for tax-filing purposes.

5. What is decision making?

Decision making is the process of defining the problem and identifying and choosing alternative
courses of action in a manner appropriate to the demands of the situation. The definition
indicates that the manager must adapt a certain procedure designed to determine the best
option available to solve certain problems. Decisions are made at various management levels
(e.g., top, middle, and lower levels) and at various management functions (e.g. planning,
organizing directing, and controlling Because of this, decision making is regarded as “the heart”
of all the management functions.
6. What are the external factors of a firm?
The external environment consists of elements outside an organization that are relevant to
business operations. These elements play important roles in business operations because these
are the sources of the inputs required by business firms for conversion into outputs which, in
turn, are required by the external environment.
There are two elements that compose the external environment. They are as follows.
1. Direct Action Elements. These directly influence the organization. These include the
consumers, competitors, labor unions, suppliers, financial institutions, and government
agencies. They are often referred to as stakeholders of the organization.
2. Indirect Action Elements. These do not affect the organization directly. Instead, they affect
the climate in which the operations of the organization take place. These are the
technological, economic, socio-cultural, political-legal and international variables. There are
instances, however, when an indirect-action element of one industry is regarded as a direct
action element of another.