FORMS OF BUSINESS

ORGANIZATIONS
• 1. Preparation of general-purpose financial
statements.
• 2. Evaluation of the performance of a sales
department.
• 3. Develop standards to address a new business set
up.
• 4. Review tax compliance of the business.
• 5. Evaluate whether a branch of the business
complies with the collection and deposit policy of
the company.
• 6. Review whether the financial statements are
presented fairly and in compliance with accounting
standards.
• 7. Report on the spending of government funds.
• 8. Report on the total cost of materials and labor
used in the production.
• 9. Conducting lectures on accounting topics.
Potential investors; banks; suppliers; BIR; DOLE
1. Income or profit of the business
2. Liabilities or amount owed by the business to its
suppliers
3. Salaries and other benefits paid to employees
4. Resources or assets of the business
5. Taxes paid by the business
FORM OF BUSINESS ORGANIZATION

1. Sole Proprietorship
2. Partnership
3. Corporation
4. Cooperative
•Formed by a single individual
•Separate legal existence
•Limited liability
•Mutual agency
•Transferrable ownership rights
•Virtually unlimited life
•Simplest form under which a business can
operate
•Do not have separate legal existence from the
owner
•Unlimited liability
•Government regulations
•Limited life
•Co-ownership of partnership property
•Double taxation
•Partnership agreement
•Corporation management
•Dividends
SOLE PROPRIETORSHIP

•Formed by a single individual

•Simplest form under which a business
can operate
•Do not have separate legal existence
from the owner
ADVANTAGES OF SOLE PROPRIETORSHIP

• 1. Ease of formation
• 2. The owner has full control of the business
• 3. Owners can mix personal and business assets
• 4. Owners have all the profits for themselves
• 5. Simple taxation
DISADVANTAGES OF SOLE PROPRIETORSHIP

• 1. Unlimited Liability
• 2. Difficulty of raising additional capital
• 3. Owner’s bias
PARTNERSHIP

• According to the partnership code of the

Philippines, Title IX of the Civil Code of the
Philippines, a partnership is a contract whereby
two or more persons bind themselves to
contribute money, property, or industry to a
common fund, with the intention of dividing
the profits among themselves.
GENERAL FEATURES OF PARTNERSHIP

• 1. Separate legal existence

• 2. Mutual agency
• 3. Unlimited liability
• 4. Limited life
• 5. Co-ownership of partnership property
• 6. Partnership agreement
ADVANTAGES OF GENERAL PARTNERSHIP

• 1. Easier to create than a corporation

• 2. Better ability to acquire additional capital
than sole proprietorships
• 3. Larger pool of human capital than sole
proprietorships
DISADVANTAGES OF GENERAL PARTNERSHIP

• 1. Unlimited liability
• 2. Mutual agency
• 3. Limited life
CORPORATION

• An artificial being created by the operation of

law, having the right of succession and the
powers attributes, and properties expressly
authorized by law or incident to its existence.
 GENERAL FEATURES OF A CORPORATION
• 1. Separate legal existence
• 2. Limited liability
• 3. Transferrable ownership rights
• 4. Virtually unlimited life
• 5. Corporation management
• 6. Government regulations
• 7. Double taxation
• 8. Dividends
ADVANTAGES OF A CORPORATION

• 1. Ability to acquire additional capital

• 2. Transferable ownership rights
• 3. Limited liability of stockholders
• 4. Virtually unlimited life
• 5. Large pool of human capital
DISADVANTAGES OF A CORPORATION

• 1. Heavily regulated by the government

• 2. Double taxation
• 3. Not easy to form
• 4. More expensive to form than sole
proprietorships and partnerships
COOPERATIVES

• According to the Cooperative Code of the

Philippines, “a cooperative is a duly registered
associations of persons, with a common bond of
interest, who have voluntarily joined together to
achieve a lawful common social or economic end,
making equitable contributions to the capital
required and accepting fair share of risks and
benefits of the undertaking in accordance with
universally accepted cooperative principles.
COOPERATIVES

• According to the same Code, the primary

objective of a cooperative is to provide goods
and services to its members and enable to
attain increased income and savings.
 A cooperative may be formed by at least 15
persons for any of the following purposes:
• 1. To encourage thrift and savings mobilization
among members.
• 2. To generate funds and external credit to the
members for productive and provident purposes.
• 3. To encourage among members systematic
production and marketing.
• 4. To provide goods and services and other
requirements to the members.
 A cooperative may be formed by at least 15
persons for any of the following purposes:
• 5. To develop expertise and skills among its
members.
• 6. To acquire lands and provide housing benefits
for the members.
• 7. To insure against losses of the members.
• 8. To promote and advance the economic, social,
and educational status of the members.
•Give 1 advantage and 1 disadvantage of
each form of business organization (sole
proprietorship, partnership, and
corporation).