CHOOSING THE

LEGAL FORMS OF
YOUR BUSINESS
 OBJECTIVES
At the end of the discussion, you will be able
to:
• Identify the most common form of the
businesses enumerated;
• Analyse the advantages and disadvantages of
the legal forms of business enterprises.
 GROUP
ACTIVITY
Identifying Advantages And Disadvantages Of
The Legal Forms Of Businesses
 Scoring Rubric
Content – 10 pts.
Neatness – 10 pts.
Timeliness- 10 pts.
 SOLE
PROPRIETORSHIP
SOLE PROPRIETORSHIP
• A sole proprietorship is a
business unit owned and
managed by only one
person. It is the simplest and
most common form.
 SOLE PROPRIETORSHIP
ADVANTAGES DISADVANTAGES
• EASY TO SET UP • UNLIMITED LIABILITY
• CONTROLLED BY • DIFFICULT TO RAISE
OWNER CAPITAL
• TAX INCENTIVES • LIMITED LIFE
PARTNERSHIP
PROCTER & GAMBLE
PARTNERSHIP
• When two people own the
business, it is called a
partnership.
• Reasons why people form
partnerships:
– Combine funds
– Shared responsibility
 PARTNERSHIP
ADVANTAGES DISADVANTAGES
• EASY TO SET UP • UNLIMITED LIABILITY
• MORE RESOURCES • DIFFICULT TO RAISE
• SHARED CONTROL CAPITAL
• TAX ADVANTAGES • RESPONSIBLE FOR
PARTNER DECISIONS
CORPORATION
CORPORATION
• A corporation is a legal person. It is a
legal person because it can do most
business acts that a natural person
can do.
• As a separate legal person, the
corporation may enter into contracts,
may sue and be sued, and buy shares
in other corporations.
 CORPORATION
ADVANTAGES DISADVANTAGES
• EASY TO RAISE CAPITAL • HARDER TO SET UP
• NO PERSONAL LIABILITY • HIGHER TAXES
• TRANSFER OWNERSHIP
• UNLIMITED LIFE
 WHY IS IT IMPORTANT FOR US
TO KNOW THE BETWEEN THESE
FORMS OF BUSINESSES?
SITUATIONAL
ANALYSIS
 Carol and Cristina are friends. They work in the
same government office. One day during coffee
break, Carol who is married and with two children,
complained to Cristina how difficult it is to make
ends meet with the small salary that she and her
husband are receiving. When she heard her friend
complain, Cristina said, “Why don’t you put up a
sideline? You can cook and bake very well. You can
sell cakes, biscuits, tocino, and corned beef. I am
sure you will have many buyers in this office alone.”
 Carol liked the idea and persuaded Cristina to
be her partner. The two friends contributed ₱2,
000 each to start the business. They agreed to
split the profit in half. Carol would take care of
production and Cristina would concentrate on
marketing.
 Soon, Carol had her hands full, baking cakes
and preparing many kinds of processed meat.
Cristina started getting orders from the office
cafeteria, they had to register the business as a
partnership under the name Double C Food
Products. Form then on, the canteen was placing
regular orders and even sold their products on
consignment.
 In six months, the partners earned ₱20, 000 in
profit which they divided equally between the
two of them. Meanwhile, Carol was exhausting
herself with her production efforts. She had to
stay up cooking until early morning to keep up
with the orders. She could not even rest during
weekends.
 There were days that she had to be absent
from weekends. There were days that she had to
be absent from the office. On the other hand,
Cristina’s life went on very much as usual
because once the first orders have been booked,
most of the buyers placed repeat orders.
 Before the business reached its first year
anniversary, Carol fell ill. When she recovered,
she told Cristina that her husband forbade her
from continuing with the business.
QUESTIONS:
1. What went wrong with the business?
2. If you were Carol, would you have
entered into a partnership with a friend or
would have registered the venture as a sole
proprietorship?
3. Were the partners right in splitting the
profits equally between themselves?
Categorize The Following Businesses To Its Most Common
Legal Form

BDO Unibank Microsoft

Practice Tutor P&G
Youtuber Farms
Legal Practices FedEx
Doctor Offices Local Barber Shop
PepsiCo Amazon
Auto-Repair Shop IKEA
EVALUATION
True or False
1. The simplest and most common legal form of
business is the sole proprietorship.
2. A sole proprietor is required to file a personal
income tax as well as business income tax
separately.
3. In a partnership, profits should always be
shared equally by the partners.
4. The best form of business is a corporation.
5. Foreigners cannot be owners of a corporation
in the Philippines.
 ASSIGNMENT
List down the top 10
corporations in the Philippines
as of 2022 and write down their
short history.