2. Outlin
I. The Organizational Vehicle
e
II. The Sole Proprietorship
1. Advantages
2. Disadvantages
III. Partnership
1. Types of Partnership
2. Advantages
3. Disadvantages
IV. The Corporation
1. Advantages
2. Disadvantages
3. Outline
V. The Cooperative
1. Advantages
2. Disadvantages
3. Types and categories of
Cooperative
VI. Legal Considerations in Choice of
Organization
VII. General Requirements and
Procedures for Registration
1. Registering a Single
Proprietorship
2. Registering a Partnership
4. I. The Organizational
Vehicle
• Before a business can open its
doors to the buying public, there
has to be a vehicle by which
products and services can be
bought or availed of from the
entrepreneur.
• Such vehicle or organization has
to be registered, authorized or
licensed to transact business
with the buying public.
5. II. The Sole
Proprietorship
• The sole
proprietorshi
p or single
proprietorshi
p is a form of
business
organization
initiated,
6. Advantages of Sole
Proprietorship
1. Simple to organize
2. Low start-up capital
3. Owner owns all profits
4. Total decision making
authority
5. Easy to discontinue
6. Good tax privileges
7. Disadvantages of
Sole Proprietorship
1. Unlimited personal
liability
2. Limited skills and
capabilities of the sole
owner
3. Limited access to capital
4. Lack of continuity for the
business
9. Types of Partners
1. General partner – one who shares
ownership and management of the
business and liable to the extent of
his separate property after all the
assets of the partnership are
exhausted.
2. Limited partners – partners with
limited financial liability and they do
not take active role in the
management of the firm.
3. Silent partners – are those not taking
active role in the operation of the
business but are generally known to
10. Types of Partners
6. Managing partner – who is designed
to manage the operations of the
business of the partnership.
7. Industrial partner – who
contributes his knowledge or
personal services to the
partnership
8. Secret partner – who takes active
part in the business but is not known
to be a partner by outside parties.
9. Nominal partner or partner by
estoppel – who is actually not a
11. Advantages of
Partnership
1. Easy to establish
2. Complementary skills of
partners
3. Division of profits
4. Large pool of capital
5. Ability to attract
limited partners
6. Little governmental
12. Disadvantages of
Partnership
1. Unlimited liability of at
least one partner
2. Difficulty in disposing of
partnership interest
without dissolving the
partnership
3. Lack of continuity
4. Potential for
13. IV. The Corporation
• A corporation is an
artificial being,
invisible, intangible,
and existing only in
contemplation of
law.
• Compared to sole
proprietorship or
partnership, a
corporation is more
complex of the
three major forms
14. Advantages of
Corporation of the
1. Limited liability
stockholders
2. Ability to attract
capital
3. Transferable ownership
4. Large pool of skills,
expertise, and knowledge
15. Disadvantages of
Corporation involved in
1. Cost and time
the incorporation
process
2. Taxation
3. Legal restrictions and
regulatory red tape
4. Potential loss of control
by founders of the
16. V. The Cooperative
• A cooperative as a duly registered
association 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 a fair share of the
risks and benefits of the undertaking
in accordance with universally
accepted cooperative principles.
17. Fabian Abella,, one of the
pioneering authors on
cooperatives, identified the set of
universally accepted principles of
1. Open and voluntary membership
cooperatives includes as follows:
2.
3.
4.
5.
6.
Democratic control
Limited interest on capital
Division on net surplus
Cooperative education
Cooperative among
cooperatives
18. Advantages and
Disadvantages the cooperative
• The advantage of of
as the entrepreneur’s
Cooperatives
organizational vehicle is the tax
privileges that the government
usually provides among cooperative
organizations. The cooperative can
also source its stocks or
inventories from suppliers who offer
concessionary terms to
cooperatives. The ability to provide
direct benefits to its members and
the entire community.
19. Types and Categories
ofCredit cooperative – promotes
1. Cooperatives
thrift and savings among its
members in order to grant loans
for production and provident
purposes.
2. Consumers cooperative – is for
the primary purpose of procuring
commodities in bulk and retail
the same to the members and nonmembers.
20. Types and Categories
ofService cooperative – a service4. Cooperatives
oriented cooperative which
engages in such areas as medical
and dental care, hospitalization,
insurance, printing, housing, labor,
electric light and power,
communications and other services
needed by the members and the nonmembers in the community.
5. Marketing cooperative – engages
in the supply of production inputs to
21. VI. Legal consideration in
choice of organization
1. Initial capital
2. Taxation and government
regulations
3. Exploitation
4. Growth, expansion,
merger and sale
22. VII. General requirements and
procedures for registration
1. Registering a single
proprietorship
2. Registering a
partnership
3. Registering a
corporation
4. Registering a
23. XI.The Best Format of
Ownership
• The pros and cons of
various forms of
business
organization
should give the
prospective
entrepreneur the
chance to evaluate
his options. After
reading and
carefully
