FORMS OF BUSINESS ORGANIZATION

The three primary forms of business organization are sole or single-proprietorship, partnership and corporation. SOLE OR SINGLE-PROPRIETORSHIP Businesses which owned by one person is called sole or single-proprietorship. The owner of this business is alternately called sole proprietor, entrepreneur, self-employed, businessman and related title. Those individual practitioners of their chose profession such as lawyers, doctors, CPAs, engineers and other professional also belongs to this form of entity. To establish a single proprietorship business is to register at the Department of Trade and Industry (DTI). Advantages Disadvantages
liable for all the business debts and obligations. • Owner’s resources are limited (capital, skills, etc) • All the losses are borne by the owner. • Limited life – the business is automatically ceases when the owner is dead or imprisoned or became insane.

• Easiest to set-up – only few legal requirements is • Unlimited liability – the owner is the one legally
needed to form the business. • Only one person decides for the business, the owner. • All the profits are goes to the owner. • Not the business but the owner is the one taxed. • Easy to dissolve.

PARTNERSHIP The entity is said to be a partnership when the business is formed by two or more person who agreed to contribute money, property, industry and intelligence to a common fund with the intention of dividing the profits among themselves. The owners are called partners. A partnership business is registered at Securities and Exchange Commission (SEC). Advantages
• Easy to start – can be formed by mere agreement of two or more person. • Common pool of resources – joint resources of capital, skills, etc. • Profits are divided among partners. • Taxed if formed as commercial partnership but taxexempt if professional partnership.

Disadvantages

• Unlimited liability – a general partner is legally liable

for the unsettled debts of the partnership • All partners may be held liable for the action of one partner. • Consensual and restricted transfer of ownership. • Limited life – insanity, incapacity or death of a partner terminates the partnership. Also, the disagreements among partners and change of partners may dissolve the partnership.

CORPORATION A corporation is an organization which is registered as an artificial person who does business under the operation of the law. Its artificial being or personhood is created thru Articles of Incorporation and By-Laws and are registered at Securities and Exchange Commission (SEC). Those who formed the corporation are called incorporators and the owners of its stocks or shares are called stockholders or shareholders. A corporation maybe registered as a profit or non-profit entity. Advantages
• Limited liability – shareholders are not legally liable for unpaid liabilities of the corporation. • Power of succession – corporation continues to exist in spite of death, withdrawal or changes of officers and stockholders. • Greater pool of resources (skills, capitalization, etc) • Renewable life – may renew its registered life every 50 years.

Disadvantages
• Costly and tedious to organize • Only the BOD / authorized officers can bind contracts, and can decide for the corporation • Shareholders have limited access and control over the operations and management.

• Taxed are an income tax flat-rate of 30%

Researched by WBBBB Accounting & Management Services. Click & visit our internet site: http://wbbbb-ams.blogspot.com/ ▪ Email us: wbbbb.ams@gmail.com ▪ Call/Text CP: 0917 767 78 56 / 0908 741 97 42 ▪ Call DL: 378 54 04 Services Offered: ▪ Business Registration ▪ Management Advisory Services ▪ Accounting/Bookkeeping ▪ Tax Advisory/Services ▪ Loans/Projects Proposals ▪ External Auditing ▪ Tax Returns ▪ Payroll Computation Services ▪ Financial Statements ▪ Financial Reports ▪ Assistance to SEC, BIR, SSS, Pag-ibig, Phil-health, etc ▪ Tutorials, Training or Consulting Services

Sign up to vote on this title
UsefulNot useful