Business Ethics and

Social Responsibility
Learning competency
The learners shall be able to…
• 1.1 differentiate the forms of business
organizations BM_ESR12-IIIa-d-1.1
• 1.2 give examples of the forms of business
organizations ABM_ESR12-IIIa-d-1.2
 What do I know?
•Directions: Analyze the question
of whether it is true or false. You
may raise your hand if you want
to answer
•
1.Business is an activity
where goods or services
are exchanged for money.
•2. Sole proprietorship equity
is limited to the owner’s
personal resources
•3. A partnership may
generate funds through
selling share of stocks
.
•4. In partnership, shared
resources to provide more
capital for the business
•5. Each partner is 100%
responsible for debts and
losses
•6. A corporation may be
owned by one person
•7. Handling money for a
sole proprietorship is
easier than partnership
•8. Sari-sari store and
bookstores fall under the
service business category.
•9. Bakery is a service
business
•10. The sole proprietor can
pass the business down to
his/her heirs.
•Nature and Forms of
Business organization
•What is Business?
Business
• Is an activity where goods or services are
exchanged for money.
• A person who is engaged in business is
called an entrepreneur or businessman
1. Sole Proprietorship
• The term ‘sole’ means single and
‘proprietorship’ means ‘ownership’.
So, only one person is the owner of
the business organization.
• A type of business unit where one
person is solely responsible for
providing the capital and bearing the
enterprise’s risk, and for the
management of 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 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
2. Partnership
• A form of business owned by two or more persons. The
details of the arrangement between the partners are
outlined in a written document called articles of
partnership.
• • Profits are divided among partners based on their
agreed sharing.
• • The owner is called a partner.
Advantages:
• Shared resources provide 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 finding new
partner.
• Partnership ends when any partner decides to end it
• The profits are divided among the partners.
• • A partner can be held liable for the acts of the
other partners.
• • In a lawsuit, the personal properties of the
partners can be held beyond their contributions
and may be used to answer for any liability of
the partnership.
3. Corporation
• A corporation is a business organized as a
separate legal entity (artificial person) under the
corporation law with ownership divided into
transferable shares of stocks
• • Emphasize that the law (Corporation Code of
the Philippines) creates a corporation.
• The corporation begins its existence
from the date the Articles of
Incorporation is approved by the
Securities and Exchange Commission
(SEC).
• A corporation is an artificial being or
juridical person, meaning in the eyes of the
law, a corporation is like a person, separate
from its owners. Therefore, a corporation
can transact on its own, it can own
properties, incur obligations and it can even
sue or be sued.
• The owners are called stockholders or
shareholders.
• • The word ‘Corporation/ Incorporation/
Corp./Inc.’ appears in the name of the entity.
• • The voting rights of a shareholder are generally
based on the percentage of ownership.
• • The management of the business is delegated by
the shareholders to the Board of Directors
• • The ownership is divided into shares and the
value of one share may be denominated at a
smaller amount, for example at PHP10 per share.
• • The proof of ownership is evidenced by a stock
certificate.
Advantages

• Can easily raise additional funds by selling

shares of stocks to the public.
• Shareholders are not personally liable for the
debts of the corporation. The extent of their
liability is limited to their equity (ownership) in
the corporation.
Disadvantages
• It is relatively complicated to set up.
• • Subject to several legal restrictions as listed in the
Corporation Code of the Philippine
• • Corporate operations are costly
• The corporation pays taxes on its income depending on its
type and the shareholders pay dividend taxes, so income gets
taxed twice.
•• Start a corporate business requires complex paperwork
4. Cooperative
• is a duly registered association of
persons with a common bond of
interest, voluntarily joining together to
achieve their social, economic and
cultural needs.
• The owners are called members who contribute
equitably to the capital of the cooperative.
• • The members are expected to patronize their products
and services.
• • The word ‘cooperative’ appears in the name of the
entity.
• • This form of business organization is regulated by the
Cooperative Development Authority (CDA).
Advantages
• • Enjoys certain tax exemption
privilege
• • Promotes the concept of sharing
resources
• Under the Tax Reform for Acceleration and Inclusion (TRAIN)
Law, cooperatives in the Philippines enjoy certain tax
exemptions. Here are the key points regarding their tax
privileges:
• 1. Income Tax Exemption: Cooperatives are exempt from income
tax, provided they meet specific conditions:
• They must secure a tax exemption certificate.
• Only the related activities specified in the articles of cooperation and
the tax exemption certificate are exempted during the certificate’s
validity period.
2. Value-Added Tax (VAT) or Percentage Tax
Exemption
• Cooperatives are also exempt from VAT or percentage
tax, subject to the following conditions:
• They must not be considered a Top Withholding Agent
under Section 2.57.2 (I) of RR No. 2-98, as amended
by Section 2 of RR No. 11-2018 and RR No. 7-20192.
• These exemptions aim to support and promote the
cooperative sector in the country.
Disadvantages
• • Limited distribution of surplus
• • Requires continuous education programs for
members.
• • The members have active and direct
participation in the business of the cooperative.
Evaluation

•Let’s have a quiz!

Directions: Create a table of four columns, label it with the
forms of business then classify each statement in the proper
column.
Example :
• 1. It is a business relationship between two or more people
• 2. It is operated and owned by one person
• 3. It is a separate entity from its owners
• 4. The individuals shares profit and libility
• 5. The members are expected to patronize their products and services
• 6. There could be difficulty in raising up capital
• 7. There is a limited distribution of surplus.
• 8. The owners are called stockholders or shareholders.
• 9. They are exempt from income tax, provided they
meet specific conditions.
• 10. The proof of ownership is evidenced by a stock
certificate