I prepared these slides for my Micro Economics class for presentation on the topic of "Types of Business Organizations".

1. By: Junaid Inam

2. Group of People
Common Objective
Profit Maximization
Human Needs & Wants
Producing Goods
Providing Services

3. FORMS OF BUSINESS
ORGANIZATION

4. FORMS OF BUSINESS
ORGANIZATION
Three Organizational Forms
developed by Business Owners
• Sole Proprietorship
• General Partnership
• Corporation

5. FORMS OF BUSINESS ORGANIZATION
DDEEFFIINNIITTIIOONNSS
Sole Proprietorship Partnership Corporation
Any Business
Owned and
Operated by an
Individual
Two or More
Persons
Operating a
Business for a
Profit
Legislatively
Created and
Regulated
Governance,
Ownership and
Financial
Structure

6. FORMS OF BUSINESS ORGANIZATION
FFOORRMMAATTIIOONN
Sole Proprietorship Partnership Corporation
No Formalities or
Legal
Documentation;
May be Implied
from Conduct or
Actions
Written or
Oral
Agreement or
May be
Implied from
Conduct or
Actions
Filing of
Articles of
Incorporation
with Secretary
of State and
Payment of
Fees

7. FORMS OF BUSINESS ORGANIZATION
GGOOVVEERRNNIINNGG DDOOCCUUMMEENNTTSS
Sole
Proprietorship Partnership Corporation
None
Required
None Required;
Most have
Agreement
specifying
Rights, Duties
and Obligations
Articles of
Incorporation
create
Corporation;
Bylaws prescribe
its Operation

8. FORMS OF BUSINESS ORGANIZATION
NNAATTUURREE OOFF OOWWNNEERRSSHHIIPP
Sole
Proprietorship Partnership Corporation
Wholly
Owned by
Single
Individual
For Contribution,
Partner receives
Proportionate
Share of
Profits/Losses and
Partnership
Property
Residual Claim
on Corporate
Equity and
Right to Vote
for Directors
and Essential
Governance

9. FORMS OF BUSINESS ORGANIZATION
LLIIAABBIILLIITTYY
Sole
Proprietorship Partnership Corporation
Sole
Proprietor
Personally
Liable for All
Debts and
Obligations
Partners are Jointly
and Severally
Liable for all
Partnership
Obligations, in
Contract and in
Tort
Shareholder’s
Liability limited
to Extent of
Capital
Contribution
[Limited
Liability]

10. FORMS OF BUSINESS
ORGANIZATION
TAXATION
Sole
Proprietorship Partnership Corporation
Not a Taxable
Entity;
Income
(Loss) passes
through to
Sole
Proprietor
Partnership not a
Taxable Entity;
Allocations of
Income and Loss
allowed within
Partnership
before Pass-
Through
Corporation
taxed as
Separate Entity
&
Dividends/Capit
al Gains also
Taxed [Double
Taxation]

11. FORMS OF BUSINESS ORGANIZATION
MANAGEMENT
Sole
Proprietorship Partnership Corporation
Sole
Proprietor has
Complete
Management
Control
All Partners have
Equal Rights in
Partnership’s
Management and
Conduct
Managed by
B.O.Ds elected by
Shareholders;
Board may
Delegate
Authority to
Appointed
Officers

12. FORMS OF BUSINESS ORGANIZATION
TRANSFER OWNERSHIP INTERESTS
Sole
Proprietorship Partnership Corporation
Sole
Proprietorship
not
Transferable;
Property and
Products are
Transferable
Limited Right
of Transfer
subject to
Consent by all
Partners
Freely
Transferable
through Formal
and Informal
Capital Markets

13. FORMS OF BUSINESS ORGANIZATION
WITHDRAWAL OF OWNER
Sole
Proprietorship
General
Partnership Corporation
Terminates
Sole
Proprietorship
Partner Death
or Withdrawal
may Terminate
Partnership
Corporation has
Unlimited Life

14. Ease of formation and dissolution.
low start-up costs and low operational
overhead.
Ownership of all profits.
Tax benefits
Decision making

15. Limited resources
Unlimited liability
Limited life
Difficulty in raising capital

16. Easy formation
Large resources
Borrowing Facilities
Sharing of risk
Combined Abilities

17. Unlimited liability
Limited life
Limited capital
Lack of harmony
Profit Sharing

18. Greater flexibility in raising capital
Ease of transferring ownership
Unlimited commercial life
Limited liability

19. Fees
Paperwork
Double taxation
Regulatory restrictions.
Higher organizational and operational costs.

21. THANK YOU