FORMS OF BUSINESS

ORGANIZATION
Learning Objectives:

 I will be able to identify the forms of business

organizations by nature of ownership.
I will be able to give examples of businesses in my
community and identify their form.
 I will be able to identify the advantages and
disadvantages of the four forms of business
organizations.
How much is
your daily
allowance?
Do you know that with
your daily allowance
you can own a
company?
 Suppose you want to
open a sari-sari store that
will need PHP 10,000
savings to start the said
business.
SOLE/SINGLE PROPRIETORSHIP

A form of business is owned by one

person; simplest, and the most
common form of business organization
It is not separate from the owner. The
business and the owner are
inseparable
SOLE/SINGLE PROPRIETORSHIP
ADVNATAGES
• The owner keeps all the profits
• The owner makes all the
decisions
• It is easy to form and operate.
SOLE/SINGLE PROPRIETORSHIP

 DISADVANTAGES

• The life of the business is limited to the life

of the owner. Once the owner dies, the
business will cease to operate under the
name of the proprietor.
• The amount of the capital is limited only by
the wealth of the proprietor.
 What if he needed amount to start
your dream sari-sari store in PHP 50, 000
and you only have PHP 25, 000 cash
savings. You ask Juan, your friend is
willing to invest his PHP 25,000 and
become part owner of the sari-sari
store, Assuming he agrees, what form of
business organization was created?
PARTNERSHIP
A formed of business owned by two or more
persons. The details of the arrangement between
the partners are outlined in a written document
called articles of partnership
 Profitsare divided among partners based on their
agreed sharing.
 The owner is called a partner.
PARTNERSHIP
ADVANTAGES
• Higher capital because tow or more
persons will contribute to the common
fund.
• It is easy to operate like sole/single
proprietorship
PARTNERSHIP
 DISADVANTAGES

• The profits are divided among the partners

• A partner can be held liable for the acts of the
other partners.
• In a lawsuit, the personal properties of the
partners can be held beyond their contributions
and may be used to answer for any liability of the
partnership.
 Assuming your dream is to open a grocery
store ant just a sari-sari store but you will
need PHP1,000,000 to start the said business.
You have only PHP25,000, your friend Juan
has PHP 25,000 and your mother is willing to
invest her PHP50,000, but still these are not
enough to start your dream grocery store.
Where will you get the money to raise the
PHP1,000,000? You may consider setting up a
corporation?
CORPORATION
A corporation is a business organized as a
separate legal entity (artificial person) under
the corporation law with ownership divided into
transferable shares of stocks.
 Emphasize that it is the law (Corporation Code
of the Philippines) that creates a corporation
 Thecorporation begin its existence from the
date that Articles of Incorporation is approved
be the SEC
CORPORATION
 The SEC is the government agency primarily tasked to
regulate private corporations in the Philippines.
 The owner are called stockholders or shareholders
 The word Corporation/Incorporation/Corp./Inc. appears in
the name of the entity.
 The voting rights of a shareholder is generally based in the
percentage of ownership.
 The management of the business is delegated by the
shareholders to the Board of Directors
CORPORATION
 The ownership is divided into shares and
the value of one share may be dominated
at a smaller amount, for example at PHP10
per share
 Theproof or ownership is evidenced by
stock certificate
CORPORATION
 ADVANTAGES

• Can easily additional funds by selling shares

of stocks to the public
• Shareholders are not personally liable for
the debts of the corporation. The extent of
their liability is limited to their
equity(ownership) in the corporation.
CORPORATION
DISADVATAGES
• It is relatives complicated to set up
• Subject to several legal restrictions
are listed in the Corporation Code of
the Philippines