Ownership and Organization


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Ownership and Organization

  1. 1. 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
  2. 2. 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
  3. 3. 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.
  4. 4. II. The Sole Proprietorship • The sole proprietorshi p or single proprietorshi p is a form of business organization initiated,
  5. 5. 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
  6. 6. 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
  7. 7. III. Partnership •A partnership is an association of two or more business partners who co-own
  8. 8. 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
  9. 9. 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
  10. 10. 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
  11. 11. 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
  12. 12. 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
  13. 13. 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
  14. 14. 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
  15. 15. 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.
  16. 16. 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
  17. 17. 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.
  18. 18. 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.
  19. 19. 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
  20. 20. VI. Legal consideration in choice of organization 1. Initial capital 2. Taxation and government regulations 3. Exploitation 4. Growth, expansion, merger and sale
  21. 21. VII. General requirements and procedures for registration 1. Registering a single proprietorship 2. Registering a partnership 3. Registering a corporation 4. Registering a
  22. 22. 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