FORMS

of
BUSINESS
OWNERSHIP
 Forms of Business Ownership

Sole Proprietorship
Partnership
Corporations
Modifications of the Corporate Form of Ownership
Other Forms of Business Organization
 FORMS OF BUSINESS OWNERSHIP

MAJOR FORMS MINOR FORMS

SOLE
CORPORATIONS JOINT
PROPRIETORSHIP
STOCK
COMPANY
PARTNERSHIP
JOINT
VENTURE

GENERAL LIMITED
PARTNERSHIPS PARTNERSHIPS BUSINESS
TRUST
SOLE PROPRIETORSHIP
The sole proprietorship is a type of business entity owned
and operated by a single person. The big percentage of
businesses owned by a sole proprietors indicates the
popularity of this ownership type. This is because of certain
advantages unique to sole proprietorship.

Examples:
• sari-sari stores
• a local grocery store
• a local clothes store
SOLE PROPRIETORSHIP

Advantages of Sole Proprietorship

• East and Cost of Formation

• Secrecy
• Distributions and Use of Profits
• Controls of the Business
• Government Regulation
• Taxation
• Closing the Business
SOLE PROPRIETORSHIP

Disadvantages of Sole Proprietorship

• Owners lack of Ability and Experience

• Difficulty in Attracting Good Employees
• Difficulty of Raising Capital
• Limited Life of the Firm
• Unlimited Liability of the Proprietor
PARTNERSHIP

A partnership is a legal association of two or more persons

as co-owners of an unincorporated business.

Examples:
• law firms
• physician groups
• real estate investment firms
• accounting groups
PARTNERSHIP
Advantages of Partnership
• Ease of Formation
• Pooling of Knowledge and Skills
• More Funds Available
• Ability to Attract and Retain Employees
• Tax Advantage

Disadvantages of Partnership
• Unlimited Liability
• Limited Life
• Potential Conflict Between Partners
• Difficulty in Dissolving Business
PARTNERSHIP
TYPES OF PARTNERSHIPS

General partnership
• association of 2 or more persons with unlimited
liability, who are actively involved in the business.

Limited partnership
• an arrangement where the liability of 1 or more
partners is limited to the amount of assets they have
invested in the business.
CORPORATION

A corporation is an enterprise chartered by law, with most

of the legal rights of a person, including the right to
conduct a business, to own and sell property, to borrow
money, and to sue or be sued.

Owners of corporations are called stockholders. They are

issued certificates of ownership called stock.
CORPORATION

Advantages of Corporation

• Limited Liability
• Ease of Expansion
• Ease of Transferring Ownership
• Relatively Long Life
• Greater Ability to Hire Specialized Management
CORPORATION

Disadvantages of Corporation

• More Expensive and Complicated to Organize

• Double Taxation
• More Extensive Government Restrictions and
Reporting Requirements
• Employees Lack Personal Identification With and
Commitment to Corporate Goals
MODIFICATIONS OF THE CORPORATE FORM OF OWNERSHIP

COOPERATIVE
A cooperative is defined as "an organization composed of individuals or small businesses
that have banded together to reap the benefits of a larger organization."

TYPES OF COOPERATIVES

• Credit Union
• Producers Cooperative
• Marketing Cooperative
• Consumers
• Service Cooperative
MODIFICATIONS OF THE CORPORATE FORM OF OWNERSHIP

TYPES OF COOPERATIVES

• Credit Union - accepts deposits from members and lends money to its members
• Producers Cooperative - assists one another in the procurement of raw materials,
machineries, & equipment
• Marketing Cooperative - assists members in marketing of their produce
• Consumers Cooperative - provides members with quality goods and services at
reasonable prices
• Service Cooperative - makes service readily available and at a lower price
MODIFICATIONS OF THE CORPORATE FORM OF OWNERSHIP

MUTUAL COMPANIES
A mutual company is a financial-service firm (such as an insurance company or savings
and loan associations) owned by its policyholders or depositors.

TYPES OF MUTUAL COMPANIES

• Mutual Savings bank - owned by depositors and specialized in a savings

and mortgage loans
• Mutual Insurance company - a cooperative corporation organized and
owned by its policyholders
OTHER FORMS OF BUSINESS ORGANIZATION

THE JOINT STOCK COMPANY

" a form of business enterprise in which the capital is divided into small units permitting a
number of investors to contribute varying amounts to the total, profits being dividend
between stockholders in proportion to the number of shares they own

THE JOINT VENTURE

best regarded as a particular partnership established for a specific undertaking. It is created
for the purpose of bringing together several partners to engage in a business activity, which
is normally very specialized and which exist for a limited, specific purpose
OTHER FORMS OF BUSINESS ORGANIZATION

THE BUSINESS TRUST

legal form of organization in which trustee is appointed to manage the business and its
operations through a trust relationship. Under the trust agreement, the owners of property,
securities or other assets convey these to a trustee in exchange for transferable trust
certificates