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Forms and Types of Business Organizations

crsgaspar
crsgaspar

This is a presentation that describes the different forms of business as well as the types of business according to activity.

1 of 57
FORMS OF BUSINESS ORGANIZATIONS
DEFINITION
OF TERMS
Organization – a collection of
people working together to achieve
a common purpose.
Business Organization – a
collection of people working
together to achieve a common
purpose in relation to their
organization’s mission, vision,
goals, and objectives, sharing a
common organizational culture.
SINGLE PROPRIETORSHIP
 - a form of business that
is owned, managed and
controlled by an
individual. It is the
simplest and the most
numerous form of
business organization.
DIFFERENT
TYPES OF SOLE
PROPRIETORSHI
P
Self-Employed Business Owner
A self-employed business owner is someone
who conducts a trade or business with the
intent of making a profit. The self-employed
individual may conduct the business on a
full-time basis or as a part-time venture.
DIFFERENT
TYPES OF SOLE
PROPRIETORSHI
P
Franchise
A franchise may also take on the form of a sole
proprietorship. In a franchise, the sole proprietor, also
referred to as a franchisee, pays a fee to a franchisor
in exchange for the right to use the company brand.
The franchisee is obligated to follow a predetermined
business model that controls such areas as
operations, marketing, pricing and the ability to
expand. The franchisee must also pay the franchisor
royalties, which are typically a percentage of the
franchise unit's gross sales. A franchise can be a good
choice for the sole proprietor who has little business
experience, as the franchisor provides a successful
business model as well as marketing and operational
support.
SOLE PROPRIETORSHIP
Advantages Disadvantages
Ease of Formation Unlimited liability
Owner has full control
of the business
Difficulty of raising
additional capital
The owner can freely
mix personal assets with
business assets
Owner’s bias
Owner has all the
profits for himself or
herself
 Simple Taxation
Ad

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Forms and Types of Business Organizations

  • 1. FORMS OF BUSINESS ORGANIZATIONS
  • 2. DEFINITION OF TERMS Organization – a collection of people working together to achieve a common purpose. Business Organization – a collection of people working together to achieve a common purpose in relation to their organization’s mission, vision, goals, and objectives, sharing a common organizational culture.
  • 3. SINGLE PROPRIETORSHIP  - a form of business that is owned, managed and controlled by an individual. It is the simplest and the most numerous form of business organization.
  • 4. DIFFERENT TYPES OF SOLE PROPRIETORSHI P Self-Employed Business Owner A self-employed business owner is someone who conducts a trade or business with the intent of making a profit. The self-employed individual may conduct the business on a full-time basis or as a part-time venture.
  • 5. DIFFERENT TYPES OF SOLE PROPRIETORSHI P Franchise A franchise may also take on the form of a sole proprietorship. In a franchise, the sole proprietor, also referred to as a franchisee, pays a fee to a franchisor in exchange for the right to use the company brand. The franchisee is obligated to follow a predetermined business model that controls such areas as operations, marketing, pricing and the ability to expand. The franchisee must also pay the franchisor royalties, which are typically a percentage of the franchise unit's gross sales. A franchise can be a good choice for the sole proprietor who has little business experience, as the franchisor provides a successful business model as well as marketing and operational support.
  • 6. SOLE PROPRIETORSHIP Advantages Disadvantages Ease of Formation Unlimited liability Owner has full control of the business Difficulty of raising additional capital The owner can freely mix personal assets with business assets Owner’s bias Owner has all the profits for himself or herself  Simple Taxation
  • 7. PARTNERSHIP - By the contract of Partnership, two or more persons bind themselves to contribute money, property, or industry to a common fund with the intention of dividing the profits among themselves. Two or more persons may also form a partnership for the exercise of profession. Art. 1767, Civil Code
  • 8. Different Types of Partners:  General partners, who invest in the partnership, participate in the day-to-day operations and are liable for debts and lawsuits of the partnership  Limited partners, who invest in the partnership but who have no participation in day-to-day operations and who are not usually considered to have liability.
  • 9. DIFFERENT TYPES OF PARTNERSHIP General Partnership An association of two or more persons that carry on as the co-owners of a business in order to generate a profit. The default rule is equality between all members and the only way to change this is through a formal written agreement. Each partner possesses an equal voice in management and the authority to act as agent for the partnership. Each partner can be held liable for all debts of the partnership, and for torts committed by other partners within the course of the partnership's business.
  • 10. DIFFERENT TYPES OF PARTNERSHIP Limited Partnership A limited partnership is formed by two or more persons, having one or more general partners and one or more limited partners. A limited partner has no voice in the active management of the limited partnership, which is conducted by the general partner(s). Every limited partner's liability is limited to the capital he has contributed to the partnership.
  • 11. DIFFERENT TYPES OF PARTNERSHIP Limited Liability Partnership With an LLP, partners will receive the same beneficial taxation provided by a general partnership, and will also be shielded from the debts, and liabilities of the business. In addition, every partner in an LLP will be protected from the actions of other partners.
  • 12. PARTNERSHIP (General Partnership) Advantages Disadvantages  Easier to create than corporation  Unlimited liability  Better ability to acquire additional capital than sole proprietorships  Mutual agency  Larger pool of human capital than sole proprietorship  Limited life
  • 13. CORPORATION Is an artificial being created by operation of law, having the right of succession and powers, attributes and properties expressly authorized by law or incident to its existence. - Sec. 2 of B.P. Blg. 68 (Corporation Code of the Philippines)
  • 14. Many different types of corporations exist, and they are generally classified depending on specific factors, which include:  The business purpose of the corporation  The manner in which the corporation's income is taxed  The number of shareholders and amount of stock to be issued  Whether the corporation is incorporated to make a profit
  • 15. DIFFERENT TYPES OF CORPORATION Business Corporation A corporation formed to engage in commercial activity for a profit. Another name for this type is a "for-profit" corporation.
  • 16. DIFFERENT TYPES OF CORPORATION C Corporation A corporation whose income is taxed through the corporation rather than its shareholders. Any corporation that does not choose S Corporation tax status (see below) under the Internal Revenue Code is a C Corporation by default.
  • 17. DIFFERENT TYPES OF CORPORATION Close Corporation Any corporation whose stock is freely traded and is held by only a few shareholders who are often within the same family. The requirements and privileges of Close Corporations vary by jurisdiction.
  • 18. DIFFERENT TYPES OF CORPORATION Controlled Corporation A corporation in which the majority of stock is held by one individual or firm.
  • 19. DIFFERENT TYPES OF CORPORATION Cooperative Corporation A corporation primarily organized for the purpose of providing services and profits to its members rather than for a corporate profit. The most common kind is one formed to purchase real property (such as an apartment building), so that its shareholders may lease the apartments.
  • 20. DIFFERENT TYPES OF CORPORATION Foreign Corporation A corporation that is registered in one state, but is also “authorized to do business” in one or more different states. Usually created to take advantage of tax breaks and state incorporation laws. May also refer to overseas corporations doing business in the Philippines.
  • 21. DIFFERENT TYPES OF CORPORATION Non-Profit Corporation A corporation organized for some purpose other than making a profit. Non-profits are typically granted special tax treatment.
  • 22. DIFFERENT TYPES OF CORPORATION Private Corporation A corporation founded by and composed of private individuals principally for a nonpublic purpose, such as manufacturing, banking, and railroad corporations (including charitable and religious corporations).
  • 23. DIFFERENT TYPES OF CORPORATION Professional Corporation A corporation that provides services of a type that requires a professional license. These are typically corporations made up of architects, accountants, lawyers, physicians, veterinarians, etc.
  • 24. DIFFERENT TYPES OF CORPORATION Public Corporation A corporation whose shares are traded to and among the general public. These are government-owned corporations that engage in activities benefiting the general public, usually while remaining financially independent. Such a corporation is managed by a publicly appointed board.
  • 25. DIFFERENT TYPES OF CORPORATION S Corporation: A corporation whose income is taxed through its shareholders rather than the corporation itself. Only corporations with a limited number of shareholders can elect S-corporation tax status under the Internal Revenue Code.
  • 26. CORPORATIONS Advantages Disadvantages  Ability to acquire additional capital  Heavily regulated by the government  Transferable ownership rights  Double taxation  Limited liability of stockholders  Not easy to form  Virtually unlimited life  More expensive to form than sole proprietorship and partnership  Large pool of human capital
  • 27. COOPERATIVE - a duly registered association of persons, with common bond of interests, 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 principle. ~ Cooperative Code of the Phil
  • 28. DIFFERENT TYPES OF COOPERATIVE Credit Cooperative - is one that promotes and undertakes savings and lending services among its members. It generates a common pool of funds in order to provide financial assistance and other related financial services to its members for productive and provident purposes;
  • 29. DIFFERENT TYPES OF COOPERATIVE Consumer’s Cooperative – is one the primary purpose of which is to procure and distribute commodities to members and non-members;
  • 30. DIFFERENT TYPES OF COOPERATIVE Producer’s Cooperative - is one that undertakes a joint production whether agricultural or industrial. It is formed and operated by its members to undertake the production and processing of raw materials or goods produced by its members into finished or processed products for sale by the cooperative to its members and non-members. Any end product or its derivative arising from the raw materials produced by its members, sold in the name and for the account of the cooperative, shall be deemed a product of the cooperative and its members;
  • 31. DIFFERENT TYPES OF COOPERATIVE Marketing Cooperative – is one which engages in the supply of production inputs to members and markets their products;
  • 32. DIFFERENT TYPES OF COOPERATIVE Service Cooperative – is one which engages in medical and dental care, hospitalization, transportation, insurance, housing, labor, electric .light and power, communication, professional and other services;
  • 33. DIFFERENT TYPES OF COOPERATIVE Multipurpose Cooperative – is one which combines two (2) or more of the business activities of these different types of cooperatives;
  • 34. DIFFERENT TYPES OF COOPERATIVE Advocacy Cooperative – is a primary cooperative which promotes and advocates cooperativism among its members and the public through socially-oriented projects, education and training, research and communication, and other similar activities to reach out to its intended beneficiaries;
  • 35. DIFFERENT TYPES OF COOPERATIVE Agrarian Reform Cooperative – is one organized by marginal farmers majority of which are agrarian reform beneficiaries for the purpose of developing an appropriate system of land tenure, land development, land consolidation or land management in areas covered by agrarian reform;
  • 36. DIFFERENT FORMS OF COOPERATIVE Cooperative Bank – is one organized for the primary purpose of providing a wide range of financial services to cooperatives and their members;
  • 37. DIFFERENT FORMS OF COOPERATIVE Dairy Cooperative – is one whose members are engaged in the production of fresh milk which may be processed and/or -marketed as dairy products;
  • 38. DIFFERENT FORMS OF COOPERATIVE Education Cooperative – is one organized for the primary purpose of owning and operating licensed educational institutions, notwithstanding the provisions of Republic Act No. 9155, otherwise known as the Governance of Basic Education Act of 2001;
  • 39. DIFFERENT TYPES OF COOPERATIVE Electric Cooperative – is one organized for the primary purpose of undertaking power generation, utilizing renewable energy sources, including hybrid systems, acquisition and operation of sub-transmission or distribution to its household members;
  • 40. DIFFERENT TYPES OF COOPERATIVE Financial Service Cooperative – is one organized for the primary purpose of engaging in savings and credit services and other financial services;
  • 41. DIFFERENT TYPES OF COOPERATIVE Fishermen Cooperative – is one organized by marginalized fishermen in localities whose products are marketed either as fresh or processed products;
  • 42. DIFFERENT TYPES OF COOPERATIVE Health Services Cooperative – is one organized for the primary purpose of providing medical, dental and other health services;
  • 43. DIFFERENT TYPES OF COOPERATIVE Housing Cooperative – is one organized to assist or provide, access to housing for the benefit of its regular members who actively participate in the savings program for housing. It is co-owned and controlled by its members;
  • 44. DIFFERENT TYPES OF COOPERATIVE Insurance Cooperative – is one engaged in the business of insuring life and property of cooperatives and their members;
  • 45. DIFFERENT TYPES OF COOPERATIVE Transport Cooperative – is one which includes land and sea transportation, limited to small vessels, as defined or classified under the Philippine maritime laws, organized under the provisions of this Code.
  • 46. DIFFERENT TYPES OF COOPERATIVE Water Service Cooperative – is one organized to own, operate and manage water systems for the provision and distribution of potable water for its members and their households;
  • 47. DIFFERENT TYPES OF COOPERATIVE Worker’s Cooperative – is one organized by workers, including the self- employed, who are at the same time the members and owners of the enterprise. Its principal purpose is to provide employment and business opportunities to its members and manage it in accordance with cooperative principles; and
  • 48. CORPORATIONS Advantages Disadvantages  different types may be formed (farmers’, producers’ credit, or multi-purpose)  business control is shared  most cooperative may apply for tax exemption.  ideas and decisions made by the board of directors have to be accepted by the general membership  large pool of talents, skills, and knowledge  limited liability of members
  • 49. TYPES OF BUSINESS ACCORDING TO ACTIVITY
  • 50. SERVICE - firms that generally use their employees to provide intangible products or services to customers.
  • 51. Cash on Hand Pays employees and other expenses Performs services Receives payment from customers
  • 52. MERCHANDISING / TRADING firms that buys finished or almost finished goods from their suppliers and resells the same to customers.
  • 53. Cash on Hand Buys goods Stores goods as inventory Sells inventory Receives payment from customers
  • 54. MANUFACTURING firms that create or manufacture their own products / goods.
  • 55. Cash on Hand Buys goods Stores goods as inventory Sells inventory Receives payment from customers
  • 56. THANK YOU SOMEONE@EXAMPLE.COM Types Input Output Examples Service Labor Intangible Service Accounting and law firms, hospitals, schools, and salons Merchandising / Trading Goods / merchandise bought from suppliers Tangible; merchandise Supermarkets, convenience stores, bookstores, department stores Manufacturing Raw Materials, labor, overhead Tangible; manufactured products Car companies, Consumer products, electronic companies

Editor's Notes

  1. According to the "Entrepreneur" magazine website, a sole proprietorship is the simplest form of business to set up. A sole proprietorship consists of one owner, and the business's profits and losses are reported on the owner's personal income tax return. A sole proprietor is liable for the debts of her business, and she can be sued personally if she defaults on her obligations.
  2. Attributes of a Corporation: 1. It is an artificial being, 2. It is created by operation of law, 3. It has the right of succession, 3. It has only the powers, attributes, and properties expressly authorize by law or incident to its existence. The corporation begins its existence from the date the Articles of Incorporation is approved by the Securities and Exchange Commission (SEC). The voting rights of a shareholder is generally based on the percentage of ownership. The proof of ownership is evidenced by a stock certificate.