BUSINESS ORGANIZATION

BUSINESS ORGANIZATION

1. SOLE PROPRIETORSHIP
2. PARTNERSHIP
3. CORPORATION
4. COOPERATIVE
 SOLE PROPRIETORSHIP
It is the simplest and most common
form of business ownership (OWNED
BY ONE).
The business existence is entirely
dependent on the proprietor’s
decisions; when the proprietor dies, so
does the business.
The proprietor may operate the
business alone or with other people.
 SOLE PROPRIETORSHIP
ADVANTAGES
1. Easiest and least
expensive form of
ownership to organize.
2. In complete control, and
within the parameters of
the law, the owner makes
decision as he sees fit.
3. Profits from the business
flow-through directly to the
proprietor’s personal tax
return.
4. The business can easily be
dissolved if desired.
DISAVANTAGES:
1. Have an unlimited liability and
are legally responsible for all
the debts against the
business. Personal assets
and the business are at risk.
2. May have a hard time
attracting first-rate
employees, or those that are
motivated by the opportunity
to own a part of the business.
3. Some employee benefits
such as owner’s medical
insurance premiums are not
directly deductible from
business income.
 PARTNERSHIP
 In a partnership, two or more individuals share
ownership of a single business.
 Like sole proprietorship, the law does not distinguish
between the business and its owners.
 The partners should have a legal agreement that sets
forth how decisions will be made, disputes will be
resolved, how future partners will be admitted to the
partnership, profits will be shared, how partners can be
bought out, or what steps will be taken to dissolve the
partnership when needed.
 They also must decide upfront how much time and
capital each will contribute.
 PARTNERSHIP
Types of for-profit partnerships:
1. General partnership,
2. Limited partnership and limited
liability partnership,
3. Joint venture.
 PARTNERSHIP
1. General Partnership. A general
partnership is a business
arrangement by which two or
more individuals agree to share in
all assets, profits, and financial
and legal liabilities of a jointly-
owned business and they also
share unlimited liabilities.
 PARTNERSHIP
2. Limited Partnership and Limited
Liability Partnership. A limited
partnership has at least one
general partner and at least one
limited partner, wherein the
limited partners do not play an
active role in the business, and are
not personally liable.
 PARTNERSHIP
Joint Venture. Joint venture acts
like general partnership. It is an
arrangement between two or
more business entities, often for
the purpose of starting a new
business activity but is clearly for a
limited period of time or single
project.
 PARTNERSHIP
ADVANTAGES
1. Partnership is easy to
establish; however, time
should be invested in
developing the partnership
agreement.
2. With more than one owner,
the capacity to increase funds
may be increased.
3. The profits from the business
operations flow directly
through to the partners’
personal tax return.
4. The business usually will
benefit from the partners who
have integral skills.
DISAVANTAGES:
1. Every partner is jointly and
individually liable for the
actions of the other partners.
2. Profits must be shared with
partners.
3. Since in partnership decisions
are shared, disagreements
can occur.
4. The partnership may have a
limited life; it may end upon
the death or withdrawal of a
partner.
 CORPORATION
It is a business or organization formed by a group of
people, and it has rights and liabilities separate from
those of the owners.
It can be government-owned or privately owned.
A corporation can be taxed, sued and enter into
contractual agreements and has a life of its own and
does not dissolve when ownership changes.
It is owned by its shareholders, who elect a board of
directors to direct the corporation.
Ownership in a stock corporation is represented by
shares of stock.
 CORPORATION
ADVANTAGES DISAVANTAGES:
1. Shareholders have a 1. Requires more time and
limited liability for the money to process and
establish
corporation’s debt/
2. Being monitored by
2. Can raise additional government and some local
funds through the sale of agencies, as a result, may
stocks/shares. have more paperwork to
comply with regulation.
3. Shareholders can only
3. Have a higher overall taxes
be held accountable for and dividends paid to
their investment of stock shareholders are not
of the company. deductible from business
income, thus income can be
taxed twice.
 COOPERATIVE
 It is a limited liability business that can organize for-profit
and not-for-profit.
 Often referred as “co-op”,
 The persons making the group are called “members” and
typically classified as either consumer cooperatives or
worker cooperatives.
 Some examples of cooperatives are electric and water
cooperatives, credit union, housing and banking
cooperatives.
 All members have an equal say, limited interest on share
capital, have a returned surplus according to amount of
patronage, and open and voluntary membership.
 COOPERATIVE
ADVANTAGES DISAVANTAGES:
1. Inexpensive to register  1. Longer decision-making
2. Owned and controlled by process, requires
members; members members to participate for
have an equal vote success.
regardless of their level  2. Less incentive and are
of investment formed to provide a
involvement. service to members rather
3. Has limited liability than a return on
4. Profit distribution is investment
carried on in proportion  3. Members with greater
to the use of service investment/involvement
will still only get one vote.
BUSINESS CONCEPT