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Week 6

This document discusses the three main forms of business organization: sole proprietorship, partnership, and corporation. Sole proprietorship is owned and run by one person, while partnerships involve two or more partners who share capital and responsibilities. Corporations are legal entities separate from their owners, with shareholders holding stock. Each form has advantages like flexibility or limited liability, but also disadvantages regarding complexity, liability, or decision-making challenges.

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Zybel Rosales
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47 views11 pages

Week 6

This document discusses the three main forms of business organization: sole proprietorship, partnership, and corporation. Sole proprietorship is owned and run by one person, while partnerships involve two or more partners who share capital and responsibilities. Corporations are legal entities separate from their owners, with shareholders holding stock. Each form has advantages like flexibility or limited liability, but also disadvantages regarding complexity, liability, or decision-making challenges.

Uploaded by

Zybel Rosales
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Week 6 Date: October 12, 2020

Subject Organization and Management


Type of Activity Concept Notes
Activity Title Forms of Business Organization
Learning Target Identify the forms and economic roles of
business organizations
Reference Title Organization and Management
Author/s Cecilia Reyes-Tubera, et. al
Forms of
Business Organization
Forms of Business Organization

The following are the three forms of business


organization recognized in a capitalist
economy:
1. Sole or Single Proprietorship
2. Partnership
3. Corporation
Sole or Single Proprietorship

It is a form of business organization solely


owned and run by one person.
Advantages of Sole Proprietorship

• It is easy to form and dissolve.


• It has minimal capitalization.
• It has high degree of flexibility for owner.
• The owner keeps all profits.
• It has more leeway for taxation.
Disadvantages of Sole Proprietorship

• A creditor can make a claim against the owner’s


personal or business assets to pay off any debt.
• Stability is not guaranteed in this form.
• The sole owner takes full responsibility for all
debts and obligations related to the business.
• This has less opportunities to hone management
skills.
Partnership

• This is a form of business organization with


two people as partners.
• Capitalization is shared.
• Partners may be bound by a specific
partnership agreement.
• A partner may either be general or limited
partner. In the Philippines, partners may opt to
be either a capitalist partner or a limited
partner.
Advantages of Partnership

• Compared to other business structures, partnerships


require minimal paperwork and legal documents to
establish.
• With more than one like-minded individual, there are
more opportunities to increase their collaborative skill
set.
• People in partnerships commonly share responsibilities
so that one person doesn't have to do all the work.

•
Disadvantages of Partnership

• By having more than one person involved in business


decisions, partners may disagree on some aspects of
the operation.
• This is unstable and can be dissolved in case a partner
becomes incapacitated or dies.
•  In a partnership, all members are personally liable for
business-related debts and may be pursued in a
lawsuit.

•
Corporation

• It is regarded as a “legal entity” distinct and


separate from its owners. It is created by
operation of law. Being a juridical entity, it
can borrow money and can enter into
contracts.
• Shareholders are entitled to stock
certificates
Advantages of Corporation
• It has limited liability. In case of breakdown of
operations, creditors run after the corporation and not
the shareholders.

Disadvantages of Corporation
• It is more tedious to organize since a lot of paper work
and legalities need to be accomplished.
• This is strictly governed by law and statutes.
Compliance is highly required.
• Firm environment may be affected by the formal and
impersonal employer-employee relations.

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