FORMS OF

BUSINESS
 Learning Objectives:

• Describe the Significance and Functions of

Business Finance

• Recognize the Importance of Finance in a

Business Organization;

• Identify and Explain the different financial

institutions and financial markets; and

• Discover the Functions and Importance of

Financial Intermediaries
Nature of Management
 Management: Art or Science?
• According to the Merriam-Webster Dictionary,

• Science is the knowledge about or study of

the natural world based on facts learned
through experiments and observsation while

Arts is a skill acquired by experience, study,

or observation.
 Understanding Business

Business is an organization or
economic system where goods
and services are exchanged for
one another or for money.

 It is any lawful economic activity

concerned with production and for
distribution of goods and services for
profits.
 Business

Commerce
Industry
Services

 Trading
 Buy & Sell
 Genetic
 Merchandising 
 Finance
Extractive
 Marketing  Recreation
 Manufacturing
 Personal
 Construction
 Forms of Business
SOLE PROPRIETORSHIP
A business owned and operated by one person only. (Known as the simplest business form).

Advantages Disadvantages
1. Ease of Information 1. Unlimited Liability- The
2. Ownership of all Profits owner is personally liable
3. Low- Start Up Costs for the obligations of the
and Low Operational business including any
Overhead actions of the employees
4. Few Regulations representing the business.
5. No Corporate Income 2. Limited Life- When owners
Taxes. It is being die the business will die as
declared on the well.
owner’s individual 3. Difficulty in Raising
income tax return Capital- Usually business
loan is used for
capitalization.
4. Initial Sources of Funds
are from personal savings
for start up business.
 Partnership
This is a business owned by two or more
persons.

They Bind themselves to contribute money,

property, or industry into a common fund
with the intention of dividing the profits
among themselves.
 Advantages of Partnership

1. Synergy. There is a clear potential for

enhancement of values resulting from
two or more individuals combining
strength.

2. Partnership may be subjected to a

fewer regulations than corporations
3. Relatively easy to form

4. There is a stronger potential of access

to greater amounts of capital
 Disadvantages of Partnership

1. Unlimited Liability- General partners are

individually responsible for the obligations of
the business, creating personal risk.

2. Limited Life- A partnership may end upon death

or withdrawal of a partner.

3. There is a real possibility of conflict or disputes

between partners which may lead in dissolving the
partnership.
 Corporation

This is a business whose

capital may be divided into
shares of stock owned by
several people called
shareholders or
stockholders. It has rights
and liabilities separate from
the owners.
 Advantages

• Unlimited Commercial Life- The corporation is an

entity of its own and does not dissolve when
ownership changes.

• Greater Flexibility in raising capital through the

sale of stock.

• Ease of transferring ownership by selling stock

• Limited Liability- This limited liability is probably

the biggest advantage to organize as a
corporation.
 Disadvantages

• Regulatory- Corporations are typically more

closely monitored by governmental agencies,
including Bureau of Internal Revenue (BIR),
Securities and Exchange (SEC) as to
compliance with regulations which can be costly.

• Income is subject to double taxation-

corporations pay through corporate income tax
returns and owners personals income tax
returns for the dividend received from the
corporation.
THANK YOU!