WEEK 4 – FORMS OF BUSINESS ORGANIZATIONS Flashcards
Forms of Business Organizations involves 4 (FOUR) forms, namely:
Cooperative
Corporation
Partnership
Sole/Single Proprietorship
- owned by only an individual called the “proprietor”
- form of business easiest to organize
SOLE/SINGLE PROPRIETORSHIP
ADVANTAGES OF SOLE/SINGLE PROPRIETORSHIP:
- Ease of Formation
- Flexibility and string internal control
- Ease of dissolution
DISADVANTAGES OF SOLE/SINGLE PROPRIETORSHIP:
- Unlimited liability
- Less credit desirability and less capital raising capacity
- Risk of mixing personal and business accounts resulting in an informal accounting of accounts
- Limited life
since only one person decides when to dissolve or stop the business, it is very easy to dissolve the business
ease of dissolution
form of business organization that has two or four persons who bind
themselves to contribute money, property or industry to a common fund, with the intention of dividing the profits among themselves
Partnership
a business agreement that a partnership business must have
that includes the terms of partnership
Articles of Co-Partnership
ADVANTAGES OF PARTNERSHIP:
- Ease of formation
- Higher ability to raise funds
- Tax exemption of some partnerships
DISADVANTAGES OF PARTNERSHIP:
- Unlimited liability (general partners)
- Limited life
- Partners are jointly liable to the actions of other partners
- Instances of personal disagreements can occur and may spill over business matters.
has a 15-maximum number of shareholders
Corporation
The_ states that
“any person, partnership, association or corporation, singly or jointly with others but not more than fifteen (15) in number, may organize a corporation for any lawful purpose or purposes”
Revised Corporation Code of the Philippines (RA 11232) under section 10
capital and the certificate of ownership that is being raised in the corporation
stocks or shares
A person who bought these shares / stocks from the corporation is a
part owner of a corporation
shareholder / stockholder
ADVANTAGES OF CORPORATION:
- Continuity of operations
- Transferability of shares
- Greater source of funds
- Limited liability
DISADVANTAGES OF CORPORATION:
- More difficult to organize
- Subject to heavier taxation
- Control is defined by ownership
- Heavier regulations
are often suitable for less fortunate people because they offer high returns on investment
Cooperative
form of business organization can raise capital by issuing stocks
Cooperative
The core principle of cooperative is _
“one-member, one-vote”
ADVANTAGES OF COOPERATIVES:
- Suitable for less fortunate people
- Enjoys certain tax exemption privilege
- Promotes the concept of sharing resources
DISADVANTAGES OF COOPERATIVES:
- Limited distribution
- Requires continuous education programs
- The members have active and direct participation in the business
