CALACA ACADEMY, INC.

Senior High School

A.Y 2021-2022

Business ethics
And social
responsibility

Prepared by:

Ms. Maryjane L. Capili

 Module 1

The nature and form of business organization

 identify forms of business organizations and their

characteristics
 differentiate the forms of business organizations

YOUR
THOUGHTS?

Direction: What is the purpose of the things that you have seen in the picture?

Note: refer to worksheet number 1.

MOTIVATION

Direction: In your own Words make a reaction paper about the importance of
business to each other.

Note: refer to worksheet number 2.

LECTURE

What is business?
The term business refers to an organization or enterprising entity engaged in
commercial, industrial, or professional activities. Business can be for-Profit entities or they can
be non-profit organizations that operate to fulfill a charitable mission or further a social cause.
Business range in scale from sole proprietorships to international corporations and range in size
from small to large.
Business organization, an entity formed for the purpose of carrying on commercial
enterprise. Such an organization is predicated on systems of law governing contract and
exchange, property rights, and incorporation. Business enterprise customarily take one of three
forms: individual proprietorships, partnership, or limited-liability companies (or corporations).

There are Four Main Types of Business Organization.

SOLE PROPRIETORSHIP
The simplest and most common form of business ownership, sole proprietorship is a
business owned and run by someone for their own benefit. The business existence is entirely
dependent on the owner’s decisions, so when the owner dies, so does the business.

Advantages of sole proprietorship

 All profits are subject to the owner
 There is very little regulation for proprietorships
 Owners have total flexibility when running the business
 Very few requirements for starting often only a business license

Disadvantages:
 Owner is 100% liable for business debts
 Equity is limited to the owner’s personal resources
 Ownership of proprietorship is difficult to transfer
 No distinction between personal and business income

PARTNERSHIP
These come in two types: general and limited. In general partnerships, both owners
invest their money, property, labor, etc. to the business and are both 100% liable for business
debts. In other words, even if you invest a little into a general partnership, you are still
potentially responsible for all its debt. General partnership does not require a formal
agreement- partnership can be verbal or even implied between the two business owners.

Advantage of Partnership
 Shared resources provides more capital for the business
 Each partner shares the total profits of the company
 Similar flexibility and simple design of a proprietorship
 Inexpensive to establish a business partnership, formal or informal

Disadvantages:
 Each partner is 100% responsible for debts and losses
 Selling the business is difficult requires
 Partnership ends when any partner decides to end it.

CORPORATION
Corporation are, for tax purposes, separate entities and are considered a legal person.
This means, among other things, that the profits generated by a corporation are taxed as the
“personal income” of the company. Then, any income distributed to the shareholders as
dividends or profits are taxed again as the personal income of the owners.

Advantages of Corporation
 Limits liability of the owner to debts or losses
 Profits and losses belong to the corporation
 Can be transferred to new owners fairly easily
  Personal assets cannot be seized to pay for business debts

Disadvantages:
 Corporate operations are costly
 Establishing a corporation is costly
 Start a corporate business requires complex paperwork
 With some exceptions, corporate income is taxed twice

LIMITED LIABILITY COMPANY

(LLC)
Similar to a limited partnership, an LLC provides owners with limited liability while
providing some of the income advantages of a partnerships. Essentially, the advantages of
partnership and corporations are combined in an LLC, mitigating some of the disadvantages of
each.

Advantages of LLC
 Limits liability to the company owners for depths or losses
 The profits of the LLC are shared by the owners without double-taxation

Disadvantages:
 Ownership is limited by certain state laws
 Agreements must be comprehensive and complex
 Beginning an LLC has high costs due to legal and filing fees

Characteristics of Forms of Business Organization

Characteristics Sole General Partnership corporation

Proprietorship

Legal status Not separate Not separate Separate

Liability of owners Personal Personal No personal
Accounting status Separate separate separate
Tax status Owner taxable Partner taxable Taxable
Management authority Owner Every partner Hired
Until death or
Community Withdrawal of Until change of
owner partners Indefinite
 Practice
Direction: In your own words, differentiate sole proprietorship, corporation and
partnership.

Note: refer to worksheet number 03.

Enrichment
Direction: Write an essay why do people engage in business? You may explain your
answer by providing example.

Note: Refer to worksheet number 4.

CALENDAR OF ACTIVITIES
DAY 1 – Pretest and Motivation
DAY 2 – Lecture
DAY 3 – Practice
DAY 4 - Enrichment
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___________________________ ___________________________
Student’s Signature Parent/Gaurdian’s Signature