Forms of Business Organizations

INTERMS OF OWNERSHIP
 Naz Carcosia
Senior High School Department

SOLE / SINGLE PROPRIETORSHIP

- A sole proprietorship is the most basic and legal form of business
- It has only ONE OWNER
- A proprietor owns and manages the business and responsible for all business transactions.
Ex: Cellphone repair services, laundry shop and small-scale businesses selling and bakery.
What are the possible advantages and disadvantages of SOLE PROPRIETORSHIP?
ADVANTAGES
 A sole proprietor has complete control and decision-making power over the business
 Generally has uncomplicated business transactions and minimal regulatory requirements and cost
 With one only decisions can be arrived in less time and implemented faster
DISADVANTAGES
 Proprietor has limited ability to raise capital
 and unlimited personal liability for the obligations of the business

PARTNERSHIP
 It is an association of two or more persons who bind themselves to contribute money, property or industry to
a common fund
 Governed by the Civil Code of the Philippines
 Partners AGREEE among different things (Manage business, contributions capital, profit/ losses, form and
mode of settlement)
What are the possible advantages and disadvantages of partnership?
ADVANTAGES
 Easier to organize compared corporation
 can raise more capital compared to sole proprietorships
DISADVANTAGES
 The life of a partnership is fragile
 The liability of the partners for the debts of the business is unlimited.
TYPES OF PARTNERSHIP
 General partners -who invest in the partnership, participate in the day-to-day operations and are liable for
debts and lawsuits of the partnership
 Limited partners -who invest in the partnership but who have no participation in day-to-day operations and
who are not usually considered to have liability.

CORPORATION
 A corporation is the most complex form of business organization.
 A corporation is a legal entity that is separate and distinct from its owners.
 A corporation has standardized procedures for its creation, organization,
 Corporations are subject to greater scrutiny, regulations, control and supervision by the government
ADVANTAGES
 The liability of the owners towards the creditors is limited to their investment in the company.
 Additional capital can be raised easily through stock markets
DISADVANTAGES
 Cost of forming and managing
 Complex process and requires registration with the central regulatory authority and listing on a stock
exchange which required fulfillment of certain requirements related to the amount of capital, number of
directors
 Corporations are subject to a high income tax rate

COOPERATIVE
Cooperatives are defined by the International Cooperative Alliance’s Statement on the Cooperative Identity as
“Autonomous associations of persons united voluntarily to meet their common economic, social, and cultural needs
and aspirations through jointly owned and democratically controlled enterprises”
Advantages of cooperative
 Easy Formation
 Limited liability
 Perpetual Existence
 Social Service
 Open Membership
 Tax Advantage
 Democratic Management
Disadvantages of cooperative
 Lack of Secrecy
 Lack of Business Acumen
 Lack of Interest
 Corruption
 Lack of Mutual Interest

Types of business According to Activities

 Naz Carcosia
Senior High School Department

BUSINESS DEFINED
MAY BE ORIENTED TOWARDS PROFIT GOALS/ NON PROFIT GOALS

PROFIT ORIENTED ENTERPRISE

Aims to earn income or profit through the provisions of goods and/or services to consumers
Examples: Food manufacturers, gas stations

NON- PROFIT ORIENTED ENTERPRISE

Aims to achieve socio civic or charitable
Examples: Student Councils, Faculty Associations and Charitable institutions/ organizations

Types of business according activities

SERVICE BUSINESS OR SERVICE CONCERN
The simplest form of business
This enterprise provides services to clients or customers in exchange for fees, rent, interest or royalties.
Examples: Schools, janitorial & security agencies, practice of professionals (e.g. doctors, lawyers, architects or accountants)

Types of business according activities

MERCHANDISING BUSINESS or trading concern
This enterprise purchases goods from suppliers and without altering the state of the goods bought, sell the same at a higher
price than cost.
Ex: Sari- Sari stores, Drugstores and hardware stores

Types of business according activities

MANUFACTURING
The most complex activities produce the goods that it sells to customers.
Ex: Feeds products, manuc of shoes, preserved foods/products, bags etc

Types of business according activities

HYBRID BUSINESS
This is a company that may be classified to more than one type of business.
A restaurant, for example, combines ingredients in making a fine meal (manufacturing), sells a cold bottle of wine
(merchandising), and fills customer orders (service).