Forms of Business Organizations

1. SOLE PROPRIETORSHIP
2.PARTNERSHIP
3.CORPORATION
4.COOPERATIVE
SOLE PROPRIETORSHIP
Sole proprietorship or single proprietorship is a kind
of business that is owned by only one person. Often
the owner also acts as the manager.
Disadvantages of Sole Proprietorship
Unlimited personal liability
Hard to raise money
Heavy burden
PARTNERSHIP
A business owned by two or more persons voluntarily
associated as partners to carry on a business as co-
owners. Partners pool money, skills, and other
resources and share profit and loss according with the
terms of the partnership.
Classes of Partners
Capitalist partner
Industrial partner
Capitalist-industrial partner
Capitalist
The one who contributes money or
property to the capital of the
business
Industrial
The one who contributes his work, labor or industry to
Partnership.
Capitalist-industrial Partner
 One who contributes money or property as well as his
work or industry to the partnership
 Cannot engage in business for himself unless
partnership expressly permits him to do so
Disadvantages of Partnership
Joint and Individual Liability
Disagreements between partners
Share Profits
Example of Partnership
Warner Bros
Corporation
a company or group of people authorized to act
as a single entity (legally as a person) and as
recognized as such in law
Advantages of Corporation
Limited liability
Ability to raise money from stock
Corporate Tax Structures
Attraction to Employees
Separate Legal Entity
Disadvantages of Corporation
Double Tax
Time and Money
Additional Paper Work
Examples of Corporations:
 Microsoft
 Mcdo
 Starbucks
 Google
 Facebook
Cooperative
A cooperative is a business organization owned
by a group of individuals and is operated for
their mutual benefit.
Advantages
 Less Taxation
 Funding Opportunities
 Perpetual Existence
 Democratic Organization
Disadvantages
Obtaining capital
Lack of Membership and Cooperation
 Comparison of the 4 forms of business
organization
Sole Proprietorship partnership Corporation Cooperative
Owner (s) Proprietor – there is Partners – there are Stockholders – there Members – all
only one owner two or more owners are generally many members are owners
owners

Life of the Limited by the owner’s Limited by the Indefinite Definite

organization choice, or death owners’ choices, or
death

Personal liability of Proprietor is Partners are personally Stockholders are not Members are not
the owner (s) for the personally liable liable personally liable liable
business debts

Legal status of the The proprietorship is The partnership is the The corporation is
organization the proprietor partners separate from the
stockholders