L2; Forms of Business Ownership Flashcards
WHAT ARE THE 4 FORMS OF BUSINESS ORGANIZATION? (differentiate them briefly)
- Sole Proprietorship
- Partnership
- Corporation
- Cooperatives
It is a business owned and operated by single person.
SOLE /SINGLE PROPRIETORSHIP
enumerate the Unique advantages of a Sole Proprietorship
- Ease and Cost Formation
- Secrecy
- Distribution and Use of Profits
- Control of Business
- Government Regulations
- Taxation
- Closing the Business
The only requisites for the legal existence to commence are the following:
1. The owner’s resolution to start operating; and
2. Getting the required permit and license.
(which advantages of Sole Proprietorship is the statement under)
- Ease and Cost Formation (sole proprietorship)
is spared from various government rules which cover other forms of businesses
Sole proprietorship
The ______ income of this form of business is regarded as the ______________ income of the sole owner and is taxed accordingly.
The net income of the sole proprietorship is regarded as the personal income of the sole owner and is taxed accordingly.
In the case of what forms of businesses do the net income get taxed and will be subject to taxation again when the owners individually receive their share of profits?
partnership and corporations
Enumerate the Disadvantages of Sole Proprietorship
- Possibility that the owner lacks ability and experience;
- Difficulty in raising additional capital;
- Limited life of the firm; and
- Unlimited liability of the proprietor.
Is an association of two or more persons who have agreed to contribute money, property , or industry to a common fund with the intention of dividing the profits among themselves.
partnership
in a partnership, two or more persons have to agree to contribute what to the common fund?
- money,
- property , or
- industry
Two or more persons may form a partnership for the?
exercise of a profession
Two or more persons may form a partnership for the exercise of a profession, what is that partnership called?
GENERAL PROFESSIONAL PARTNERSHIP
The owners of a partnership are called?
partners
Example of Partnership
- Law Firms
- Certified Public Accountants
- Medical Clinics
It may be a small firms selling goods or services at a single locations, or a larger enterprise selling goods or services at different locations.
Partnership
How many people are in a partnership?
2-12
It is contractual in nature because it is formed through a contract between or among people.
partnership
The partnership can be formed by either?
an oral contract /agreement OR by a written contract/agreement.
A written contract agreement is not required in a?
Partnership
A written contract agreement is not required in a partnership, all that is needed is that?
the partners agreed to form the partnership and are amendable to the terms of the agreement.
Enumerate the 5 essential requisites of the partnership form of organization
CTVAL
- Contract Partnership which may be oral or written
- Two or more persons who have the legal capacity to enter into contract of partnership
- Valuable contribution to a common fund which may consist of money, property or industry
- An intention to divide the profits between or among the partners; and
- Lawful purpose (s)
Enumerate the 7 characteristics of a Partnership
- Mutual agency
- Voluntary association
- Based on contract
- Limited life
- Unlimited liability
- Division of profit
- Co-ownership of contributed assets.
Enumerate the Advantages of Partnership
EAAL
- Ease Formation
- Allows pooling of financial resources
- Allows pooling of skills, expertise, and experience of partners
- Less government control, supervision and intervention.
Is an artificial body organized in accordance with the provision of law in which ownership is divided into shares of stocks.
corporation
