Lesson 2: Forms of business ownership Flashcards
4 forms of business
-Sole Proprietorship
- Partnership
- Corporation
- Cooperatives
It is a business owned and operated by
single person.
SOLE /SINGLE
PROPRIETORSHIP
Unique advantages of a Sole Proprietorship
- Ease and Cost Formation
- Secrecy
-Distribution and Use of Profits - Control of the Business
- Government Regulations
-Taxation - Closing the Business
is
spared from various
government rules
which cover
partnerships and
corporations.
Government Regulations for Sole Proprietorship
The net income of
the _____________is
regarded as the
personal income of
the sole owner and
is taxed accordingly.
Sole proprietorship
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
Two or more persons may for a _______ for the
exercise of a profession.
Partnership
Partnership are also called
General Professional Partnership
The owners of a partnership are called
Partners
example of partnership
-Law Firms
-Certified Public Accountants
-Medical Clinics
Easier to form than a corporation.
Partnership
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
may be composed of TWO
PARTNERS only or dozens of partners.
Partnership
It is contractual in nature because it is
formed through a contract between or
among the partners.
Partnership
can be formed by either an
oral contract /agreement or by a written
contract/agreement.
Partnership
A written contract agreement is not
required in ____.
Partnership
Essential Requisites of a Partnership
-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)
7 characteristics of a partnership
- Mutual agency
- Voluntary association
- Based on contract
- Limited life
- Unlimited liability
- Division of profit
- Co-ownership of contributed assets.
Advantages of partnership
- Ease of 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
How many person are in a corporation?
5 or more ( including incorporators)
Incorporators are called
Shareholders or Stockholders
Evidence of Investment are
Stock Certificates
are
the written evidence
representing ownership in a
corporation.
Stock Certificates
Characteristics of a corporation
- Separate Legal Existence
- Created by operation of law
- Transferable Units of ownership
Continuity of existence - Centralized management by the BOD
is a legal or juridical entity
separate and distinct from its owners.
corporation
It requires authority given by the government
Corporation
Ownership of a corporation is divided into
transferrable units
Shares of stocks
liable only up to the extent of
shares subscribe by them.
Limited Liability
How many years can a corporation live
50 years (can extend another 50 years as well)
is another type of business
entity. Although people often describe a ____as being
distinct from a _____, the ______ business
structure is, in reality, a type of corporation.
Cooperative
are owned by its
members or the people who use the services
of the _______. Some ______ are
employee-owned.
Cooperative
focus of the co-op
building and maintaining community
how to be a member of coop
make a financial contribution
true of false:The opinions and votes of
each member in a co-op are treated equally.
true
true of false: Any profits the cooperative earns are either re-invested in
the company, similar to a nonprofit corporation, or
distributed among its member-owners, as with a for-profit
corporation.
true
in what sectors can cooperative be found? (give at least 5)
Agriculture
Financial services:
Education:
Healthcare
Housing:
Groceries:
Utilities
Worker:
Purchasing:
As a juridical entity, a ________ is
similar to a corporation.
cooperative
Corporations are registered and supervised by
the Securities and
Exchange Commission (SEC),
Cooperatives are registered and supervised by
the Cooperative
Development Authority (CDA).
why are co-ops supervised by the CDA?
This is
pursuant to the Philippine Cooperative
Code of 2008 (Republic Act No. 9520).
how many people to organize a co-op
Fifteen (15) or more
A prospective member of a
primary cooperative must have completed a
Pre-membership education seminar (PMES)
Corporations which seek to register must file
its
articles of incorporation
while cooperatives
file its
Articles of cooperation (which must be
signed by each of the organizers and
acknowledged before a notary public.)
