Business Organizations
own assets, and pay taxes.
Forms of Business Organizations
Sole Proprietorship -a business unit owned and
managed by a single individual. The sole owner has full
legal liability and unlimited power over business
activities.
Advantages of a sole proprietorship:
 First, it is easy to set up. For instance,
most start-ups prefer a single
proprietorship form of business for a
simple and manageable structure.
 Second, it only needs one person—the
sole owner—to make a decision.
 Third, there is utmost secrecy because
there is only one person privy to the
secrets of the business.
 Finally, sole proprietors only get taxed
once, and the amount levied is based on
their income.
Disadvantages of a sole proprietorship:
Unlimited liability
Partnership –binds two or more people into
contributing money, property, or industry to set up a
business or practice a profession to divide its profits and
rewards among themselves. This type of organization is
advantageous for businesspeople who want to
collaborate and share resources.
Three kinds of partnership:
1. General partnership -all partners share the
benefits and drawbacks of the business.
2. Limited partnerships -Not all
businesspeople who want to contribute
resources to a company are willing to
participate in day-to-day operations. Some
of them want protection from personal
liabilities.
*General partners are directly involved in management
operations and are legally liable for business debts. On
the other hand, limited partners are not involved in or
have minimal control over business operations. Their
personal assets are protected from debts or claims,
except for their financial investments in the company.
Limited liability partnership -No hierarchy among
partners.
Corporations -a legal body that exists separately from
its owners: the shareholders. A corporation acts in
much the same way a sole proprietor does. In other
words, it has many of the same rights and obligations as
individuals, including the ability to sign contracts,
borrow and lend money, sue and be sued, hire people,
However, unlike a sole proprietorship, a corporation is a
legal body that exists separately from its owners: the
shareholders. The owners are protected from personal
liability. When responding to legal disputes, the
corporation represents the company and its
shareholders. Fines, debts, and claims are paid off from
the corporations' funds, not from their owners' personal
assets.
Aside from the advantage of having limited liability,
corporations can access more financial sources
compared to sole proprietorships or partnerships. They
can borrow large amounts of money from banks based
on their assets and sell bonds to investors.
A corporation, having its own legal identity, is
recognized by law as a taxpayer. It must pay taxes
according to its income and the income of its
shareholders, which will typically result in a huge sum of
money. Also, maintaining a corporation is challenging
because of the paperwork and processes. While a sole
proprietorship and a partnership have easier upkeep
precisely because they involve few people, a
corporation considers hundreds of shareholders, each
of whom must be accounted for on paper.
One Person Corporations (OPCs) , essentially
corporations with a single incorporator or stockholder.
Philippine OPCs have similarities with limited liability
companies (LLCs) that exist in other countries. LLCs are
business organizations that shield stockholders from
personal liability but allow the distribution of income as
in partnerships. Philippine OPCs have features of both a
corporation and a sole proprietorship, taking on the
advantages of different types of business organizations.
Like in a corporation, the owner of an OPC has only as
much financial liability as his or her investments; like a
sole proprietor, the owner has complete control of the
company. However, taxes can be levied once on LLCs,
while OPCs are taxed as regular corporations. It means
that OPCs pay the required corporate income tax rate,
and their single incorporators pay taxes for the dividend
they receive.

TYPES OF BUSINESS
Service Businesses
A type of business that delivers intangible products to
its clients is called a service business. This offers
professional skills, expertise, skilled labor, and other
essential assistance. Examples are accounting firms,
physical therapy clinics, handyman services, mechanic
shops, delivery services, transportation, and customer
assistance.
Merchandising Businesses
Unlike a service business, a merchandising business
offers tangible goods to its customers. Companies
engaged in merchandising purchase completed or
nearly completed items from manufacturers or
suppliers to resell them for profit. Grocery stores,
appliance centers, drugstores, school supply stores,
bookstores, online sellers, and the like are companies
that are engaged in merchandising. They purchase
completed or nearly completed items from
manufacturers or suppliers to resell them for profit.
Merchandising businesses belong to two general
categories: wholesale and retail.
Wholesalers are companies that buy directly from the
product manufacturers, then sell the products to
retailers.
Retailers, on the other hand, mainly purchase items
from wholesalers then sell them to their consumers.
Other times, they may buy directly from the product
manufacturers.
Manufacturing Businesses
A manufacturing business is responsible for producing
tangible commodities from raw materials, labor, and
machines. Manufacturing companies operate factories
to mass-produce goods and sell them to wholesalers,
retailers, and occasionally to consumers directly.
Clothing manufacturers, vehicle manufacturers, food
manufacturers, and other enterprises that produce
goods are examples of manufacturing firm.
Business Organizations as Partners for
Socioeconomic Development
“The purpose of business is to provide goods and
services, the motivating force is the reward of profit for
individuals.” - According to Ronald Duska.
Contribution of Businesses to Socioeconomic
Development:
Creating Job Opportunities
The workforce is one of the most important elements in
a business organization’s operation and activities. For
this reason, businesses create employment
opportunities for the members of the community.
Employment provides people with a stable source of
income, which increases their capability to spend on
services and products offered by businesses.
Providing Opportunities for Career Advancement
People can progress towards career advancement by
gaining relevant work experience. Getting promoted to
a mid-level position is an example of career
advancement.
The experience and skills that people gain and learn
from successful ventures open up more opportunities
for them. Higher skills could mean higher wages or
salaries, which improve a person's standard of living.
Having exposure to the workplace, some employees get
inspired to become future employers and
entrepreneurs. Furthermore, employees pursue further
education to learn how they could apply their business
ideas.
Distributing Information and Training
Businesses are in constant competition with each other,
so they have the unending drive to improve their
performance in the market. They gather and organize
data on the consumers and their environment. They
organize these data into pieces of information that they
could utilize to update their strategies and technologies
and develop new products and services.
Improving the Economy
Businesses play a major role in society’s economy. They
contribute to its growth by producing goods and
providing services. The economy is in good condition if
there are signs of growth, such as high employment rate
and price stability. Businesses play a major role in
society's economy. They contribute to its growth by
producing goods and services that address the unmet
needs of the people. By creating job opportunities,
businesses provide the people with wages and salaries
that can be used to consume these goods and services.
When production and consumption in an economy are
healthy, price stability will be achieved.
Contributing to Community Development

Local business organizations and their owners are

usually involved in the social activities of their
communities. These businesses contribute to charities
with their employees volunteering in extension and
outreach activities. Also, they create opportunities
through programs that promote the well-being of the
community. For instance, business organizations
actively participate in uplifting communities in times of
calamity.

The events sponsored, organized, and hosted by local

businesses also promote a lively community and a sense
of belongingness among their members. These activities
create a symbiotic relationship between businesses and
society, which further supports stability and
development