How to Describe a

Business
Mhykaela T. Bautista
Sole Proprietorship
• A sole proprietorship is a business owned by only
one person. It is easy to set-up and is the least
costly among all forms of ownership.
• The owner faces unlimited liability; meaning,
the creditors of the business may go after the
personal assets of the owner if the business
cannot pay them.
• The sole proprietorship form is usually adopted
by small business entities.
Partnership
• A partnership is a business owned by two
or more persons who contribute resources
into the entity. The partners divide the
profits of the business among themselves.
• In general partnerships, all partners have
unlimited liability. In limited
partnerships, creditors cannot go after the
personal assets of the limited partners.
Partnership
Denedo(2004)

 Partnership is an association of two to twenty

person carrying on a business in common with the
view of making profit.
 FEATURES
OF
PARTNERSHIP
1. OWNERSHIP
2. Capital
3. Liability
4. Formation motives
5. Sources of capital
6. Method of withdrawal
7. It has no separate legal entity
8. It has no board of directors
 Kinds of partnership

1. Ordinary partnership

2. Limited partnership
 Kinds
of
partners
1. Active partner
2. Dormant/sleeping partner
3. Normal/passive partner
4. Silent partner
5. Secret partner
 Sources of partnership

 The following method could be used by partner to

fund their business: contribution from members,
back profit, borrowings from the bank, and credit
facilities.
Article of partnership or deed OF
partnership
 Name of the firm
 Name of the partners
 The place of business
 The description of the nature of business
 Theamount of capital that each part is to
contribute,
 The role of each partner in the business
 The method of profit and losses sharing,
 Thecompensation, if any, the partners are to
receive for services rendered to the business
 The right of partners in the business
 How long the business shall last
 Partner’s right in the business
 How matters shall be determined either by majority vote
or not
 Provision for the admission of new members
 The arrangements concerning withdrawals or additional
investment
 Arrangement for the dissolution of the firm in the event of
death, incompetence or other causes of withdrawal of one
or more of its members.
 Advantages of partnership

1) Greater financial resources

2) Combined abilities and skills
3) Greater continuity
4) Ease of formation
5) Joint and better decision
6) Creation of employment opportunities
7) Employment of valued employees
8) Tax advantages
9) Application of division of labor
10) Privacy
 Disadvantages of partnership

1) Unlimited liability
2) The business is not a legal entity
3) Disagreement and resignation
4) Decline in pride of ownership
5) Bureaucracy leads to slow decision and
policy making
6) Risk of mandatory dissolution
7) Limited capital
8) Restriction on sale of interest
• GoPro & Red Bull
• Bonne Belle & Dr. Pepper
• BMW & Louis Vuitton
• Uber & Spotify
• Apple & MasterCard
• Airbnb & Flipboard
• Alexander Wang & H&M
• Nike & Apple
Joint Stock Company
(Corporation)
Mhykaela T. Bautista
 A company is an association of
individuals who agreed to jointly pool
their capital together in order to establish
and own a business venture distinct from
others. They are regarded as the owners
of the company. A joint stock company
could be private limited company or
public limited company.
Kinds of Companies
 Unlimited Liability Companies
 Limited Liability Company by Guarantee
 Limited Liability Companies by Shares
Types of Limited Liability Companies

Private Limited Liability

Company
Public Limited Liability Company
Method of Formation

Memorandum of Association
Article of Association
The Prospectus
Certificate of Incorporation
Certificate of Trading
Features of a Private Company

Membership
Issuance of Shares
Transferability of Shares
Quotation
Publication of Accounts
Limited Liability
Features of a Public Company

 Membership
 Issuance of Shares
 Transferability of Shares
 Quotation as Public Companies
 Publication of Accounts
 Limited Liability
Advantages of a Private Company

Limited Liability
Privacy
Continuity
More Capital
Legal Entity
Disadvantages of a Private Company

Taxes
Shares
Advantages of Public Limited Company

 Legal Entity
 Limited Liability
 Ease of Raising Additional Capital
 Expansion is Unlimited
 Continuity
 Adaptability
Advantages of Public Limited Company

 Capital Transfer
 Flexibility
 Enjoyment of Large Scale Production unlike One- Man
Business
 Share Holders Interest is Safeguarded
 No Material Responsibility
 Employees may become Co-owners
 Democratic Management
Disadvantages of Public Limited
Company
Double Taxation
Hard to Establish
No Privacy
Non- Flexibility
Cooperation is Non Existent
Owners are Separate from Managers
Cooperative
•A cooperative is a business
organization owned by a group of
individuals and is operated for their
mutual benefit. The persons making up
the group are called members.
Cooperatives may be incorporated or
unincorporated.
According to its Nature
Merchandising
Service
Manufacturing
Agriculture
 Hybrid Business
Special Corporation
Hybrid Business