Business Organizations

Organizations created to earn profit.

Business

A business formed by a single individual; the simplest form of business.

Sole Proprietorship

The individual earns all profit but is responsible for the firm's entire debts.

Liability & Profit in Sole Proprietorship

Includes Filipino-owned and foreign-owned businesses.

Types of Sole Proprietorship

Ease of start-up, few regulations, retains all profits, complete control, easy to discontinue.

Advantages of Sole Proprietorship

Unlimited personal liability, difficulty raising capital, lack of permanence.

Disadvantages of Sole Proprietorship

A business owned by two or more people who agree to share profits.

Partnership

Types of Partnerships

General Partnership, Limited Partnership, Limited Liability Partnership (LLP), Limited Liability Company (LLC).

responsible for managing,controlling, and making business decisions.

General Partner

same purpose as an investor; does not have the authority to manage the business

Limited Partner

Ease of start-up, shared decision making, specialization, larger pool of capital.

Advantages of Partnerships

Unlimited liability (for general partners), potential conflict between partners.

Disadvantages of Partnerships

A legal entity owned by a group of stockholders or an individual in a one-person corporation.

Corporation

Types of Corporations

Stock Corporation, Non-Stock Corporation, Closely Held, Publicly Held, One-Person Corporation.

A corporation with divided shares can distribute profits to shareholders based on their equity holdings.

Stock Corporation

a corporation that neither generates profit nor issues shares of stock to its members

Non-Stock Corporation

Types of Stock Corperations

Closely Held Corporations, Publicly Held Corporations, One-Person Corporation

the stockholdings are rarely traded and often passed on to family members.

Closely Held Corporations

stockholdings are sold to the public through the stock market

Publicly Held Corporations

technically the same as a sole proprietorship, but the liability is now limited and is accounted against the corporation as a legal entity.

One-Person Corporation

Limited liability, transferable ownership rights, ability to acquire capital, virtually unlimited life.

Advantages of Corporations

Difficulty of start-up, double taxation, potential loss of control, heavy government regulation.

Disadvantages of Corporations

Owned and controlled by users, operated to benefit members rather than earn investor profits.

Cooperatives

A parent company owning diversified, independently operated, smaller companies.

Conglomerates