The Nature and Forms of

Business Organization
 Objectives
1. Differentiate the forms of business
organization.

2. Identify the advantages and

disadvantages of the different forms
of organization.

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 Globe ABS-CBN Toyota

Facebook
Mcdonalds
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If you are a man standing in front of the door having a bag full of money, which
door will you choose? Why?

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Key Terms

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L E S O
single
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S O L E
single
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KCOT S
Share of the value of the company,
investment
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S TOCK
Share of the value of the company,
investment
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HOL D E RS T OCK
Owner of corporate stock
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S T OC KHOL D E R
Owner of corporate stock
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PROT I F
Financial gain
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PROF I T
Financial gain
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B I L I T YL I A
The state of being liable for
something
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L I AB I L I T Y
The state of being liable for
something
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Forms of Business
Organization

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 Forms of Business Organization
Sole Proprietorship
It is a one-person business.

The owner has full control over

the finances and operations and
decides alone.

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 Forms of Business Organization
Partnership
It is a business relationship
between two or more people.
It refers to an arrangement
where individuals share a
business venture's profits and
liabilities.

The partners give feedback on

how to use the capital and other
critical strategic decisions that
may provide different
perspectives.

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 Forms of Business Organization
Corporation
It is an entity created by law that
is independent and distinct from
its owners and relies on the
corporate laws of the state in
which it is incorporated to
continue its existence.
Corporations have an advantage
in generating money for the
company.
It can raise funds by selling
shares of stocks.
It files taxes separately from its
owners.

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 Advantages
Sole Proprietorship Partnership Corporation
a. Tax preparation is faster.
b. Sole proprietorship has lower
start-up costs.
c. Handling money for the business
is easier.
d. Sole proprietorships have the
least government rules and
regulations that affect them.
e. The sole proprietor can own the
business for as long as he/she
wants, and when he/she wants to
move out, he/she can cash in and
sell the business.
f. Even in common practice, the
sole proprietor can pass the
business down to his/her heir.
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 Advantages
Sole Proprietorship Partnership Corporation
a. Tax preparation is faster. a. Partnership business lacks
formality as compared with
b. Sole proprietorship has lower
managing a limited company or
start-up costs.
corporation.
c. Handling money for the business
b. It is easy to start.
is easier.
c. You share the burden.
d. Sole proprietorships have the
least government rules and d. Every partner would add his/her
regulations that affect them. own expertise, skills, experience,
and connections to the business,
e. The sole proprietor can own the
thus giving it a greater chance of
business for as long as he/she
success.
wants, and when he/she wants to
move out, he/she can cash in and e. There is better decision-making.
sell the business.
f. There is privacy.
f. Even in common practice, the
sole proprietor can pass the
business down to his/her heir.
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 Advantages
Sole Proprietorship Partnership Corporation
a. Tax preparation is faster. g. The partners own and control the
b. Sole proprietorship has lower
start-up costs. business.
c. Handling money for the business
h. The more partners there are, the
is easier.
d. Sole proprietorships have the more funds are available in the
least government rules and company, which can be used for
regulations that affect them.
possible expansion.
e. The sole proprietor can own the
business for as long as he/she i. There is an easy access to profits in
wants, and when he/she wants to
move out, he/she can cash in and a business partnership. The
sell the business. partners just have to divide the
f. Even in common practice, the profits.
sole proprietor can pass the
business down to his/her heir.
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Sole Proprietorship
a. Tax preparation is faster.
b. Sole proprietorship has lower
start-up costs.
c. Handling money for the business
is easier.
d. Sole proprietorships have the
least government rules and
regulations that affect them.
e. The sole proprietor can own the
business for as long as he/she
wants, and when he/she wants to
move out, he/she can cash in and
sell the business.
f. Even in common practice, the
sole proprietor can pass the
business down to his/her heir.
Advantages
Partnership
g. The partners own and control the
business.
h. The more partners there are, the
more funds are available in the
company, which can be used for
possible expansion.
i. There is an easy access to profits in
a business partnership. The
partners just have to divide the
profits.
Corporation
a. The liability of the shareholders
of a corporation is limited up to
the amount of their investments.
b. A publicly held corporation may
sell shares or issue bonds to raise
substantial amounts.
c. It is easy for a shareholder to sell
shares in a corporation.
d. A corporation’s life has no limit,
ownership can pass through
many generations.
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 Disadvantages
Sole Proprietorship Partnership Corporation
a. The sole proprietor is personally
liable for all debts and actions of
the enterprise.
b. There is lack of financial control
because of looser structure of
sole proprietorship.
c. There could be difficulty in raising
capital.

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Sole Proprietorship
a. The sole proprietor is personally
liable for all debts and actions of
the enterprise.
b. There is lack of financial control
because of looser structure of
sole proprietorship.
c. There could be difficulty in raising
capital.
Disadvantages
Partnership Corporation
a. The business does not have any
independent legal status.
b. The business has no separate
legal personality, so the partners
are personally liable for the debts
and losses incurred.
c. The partnership business often
seems to lack the sense of
prestige more closely associated
with a corporation.
d. A partnership will often find it
more difficult to raise money
than a corporation.
e. There is a potential of differences
and conflicts.
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Sole Proprietorship
a. The sole proprietor is personally
liable for all debts and actions of
the enterprise.
b. There is lack of financial control
because of looser structure of
sole proprietorship.
c. There could be difficulty in raising
capital.
Disadvantages
Partnership Corporation
f. Decision-making can be slower
because there is a need for
consultation among partners.
g. The profit must be shared among
the partners.
h. It may require a lot of time and
energy thus may affect life-work
balance.
i. The profits earned by the
partnership will be translated to
income on the individual partners.
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Sole Proprietorship
a. The sole proprietor is personally
liable for all debts and actions of
the enterprise.
b. There is lack of financial control
because of looser structure of
sole proprietorship.
c. There could be difficulty in raising
capital.
Disadvantages
Partnership
j. There are limits on business
development like unlimited
liability, lack of funding
opportunities, and a lack of
commercial status, etc.
Corporation
a. The corporation pays taxes on its
income depending on its type
and the shareholders pay
dividend taxes, so income gets
taxed twice.
b. The management team of a
corporation can operate the
business without any real
oversight from the owners.
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 Differentiated Activites
Group the class intro three. Each group will pick
an activity card that will show what activity they
will do. The activity choices are:

1 2 3 4
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Differentiated Activity

Kinesthetic(Act-ing)

activity showing stockholders meeting. Act

out/role paly the given situation.

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Differentiated Activity

Spatial (Art-te Mo)

illustrate the difference of the 3 business forms.

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Differentiated Activity

Musical (Sing-galing)

Arrange phrases to form a song using the

definition of each forms of organization

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Differentiated Activity

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Linguisitic (Connect Me if I’m Wrong)

connect the statement to the web if the

statement doesn’t describe the forms of
business.

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 Differentiated Activites
Group the class intro three. Each group will pick
an activity card that will show what activity they
will do. The activity choices are:

1 2 3 4
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Guide questions:
1. What is the difference of the three forms of business organization in terms of
establishing? In terms of finances? Term? Management?

2. What are the advantages in setting proprietorship, partnership, and

corporation?

3. How about the disadvantages of the 3 forms of organization?

4. How can you be a successful businessman?

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What is the difference between proprietorship,
partnership, and corporation?

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 Put your hand signal up when the statement is true and put your hand signal down if it is
false.

In Corporation is In partnership, Corporations Corporation

proprietorship, separate from there is joint have tax has limited
exemptions.
owner makes its owners. undertaking to liabilities
all the share.
decisions.

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Quiz
Below are sentences that characterize the forms of business. Classify them by writing
each sentence to the proper column.
1. It is a business relationship between two or more people.
2. It is operated and owned by one person.
3. It is an independent entity.
4. The individuals agree to share profits and liabilities.
5. It can sell shares of stocks.
6. There is sharing of burden.
7. There could be difficulty in raising capital.
8. The decisions are made by a person alone.
9. It files taxes separately from its owners.
10.The owner controls fully the financial and operational matters.
Sole Proprietorship Partnership Corporation

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Sole Proprietorship Partnership Corporation

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Sole Proprietorship Partnership Corporation

1. It is a business
relationship between two or
more people.

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 Sole Proprietorship Partnership Corporation

2. It is operated and owned 1. It is a business

by one person. relationship between two or
more people.

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 Sole Proprietorship Partnership Corporation

2. It is operated and owned 1. It is a business 3. It is an independent

by one person. relationship between two or entity.
more people.

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 Sole Proprietorship Partnership Corporation

2. It is operated and owned 1. It is a business 3. It is an independent

by one person. relationship between two or entity.
more people.
4. The individuals agree to
share profits and liabilities.

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 Sole Proprietorship Partnership Corporation

2. It is operated and owned 1. It is a business 3. It is an independent

by one person. relationship between two or entity.
more people.
4. The individuals agree to
share profits and liabilities.

5. It can sell shares of

stocks.

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 Sole Proprietorship Partnership Corporation

2. It is operated and owned 1. It is a business 3. It is an independent

by one person. relationship between two or entity.
more people.
4. The individuals agree to
6. There is sharing of share profits and liabilities.
burden.
5. It can sell shares of
stocks.

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 Sole Proprietorship Partnership Corporation

2. It is operated and owned 1. It is a business 3. It is an independent

by one person.
7. There could be difficulty
in raising capital.
relationship between two or
more people.
6. There is sharing of
burden.
entity.
4. The individuals agree to
share profits and liabilities.
5. It can sell shares of
stocks.

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 Sole Proprietorship Partnership Corporation

2. It is operated and owned 1. It is a business 3. It is an independent

by one person.
7. There could be difficulty
in raising capital.
8. The decisions are made
by a person alone.
relationship between two or
more people.
6. There is sharing of
burden.
entity.
4. The individuals agree to
share profits and liabilities.
5. It can sell shares of
stocks.

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 Sole Proprietorship Partnership Corporation

2. It is operated and owned 1. It is a business 3. It is an independent

by one person.
7. There could be difficulty
in raising capital.
8. The decisions are made
by a person alone.
relationship between two or
more people.
6. There is sharing of
burden.
entity.
4. The individuals agree to
share profits and liabilities.
5. It can sell shares of
stocks.

9. It files taxes separately

from its owners.

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 Sole Proprietorship Partnership Corporation

2. It is operated and owned 1. It is a business 3. It is an independent

by one person.
7. There could be difficulty
in raising capital.
8. The decisions are made
by a person alone.
relationship between two or
more people.
6. There is sharing of
burden.
entity.
4. The individuals agree to
share profits and liabilities.
5. It can sell shares of
stocks.

10. The owner controls fully 9. It files taxes separately

the financial and from its owners.
operational matters.

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 Research about the different proprietorship,
partnership, corporation business in your
community. List down in a ¼ sheet of paper.
Assignment

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Thank you!

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