Entrepreneurial Mind

1. Chapter VII

2. Factors to Consider Before Choosing a Business Structure
1. Flexibility
2. Complexity
3. Liability
4. Taxes
5. Control
6. Capital investment
7. Licenses and Regulations
8. Business needs

3. FLEXIBILITY
How easily the
business can adapt to
changes or new
opportunities.

4. COMPLEXITY
The level of difficulty in
starting and managing
the business.

5. LIABILITY
The owner’s legal and
financial responsibility
for business debts.

6. TAXES
The amount and type
of taxes the business
must pay to the
government.

7. CONTROL
The degree of
authority the owner
has in making business
decisions.

8. CAPITAL INVESTMENT
The money or assets
needed to start and
operate the business.

9. LICENSES & REGULATIONS
The legal requirements
and permits needed to
run the business.

10. BUSINESS NEEDS
The specific goals, size,
and nature of the
business that
determine the best
legal form.

11. — The simplest and most
common form of business
ownership.
—Owned and managed by
one person, responsible for all
profits and debts.
SOLE PROPRIETORSHIP

12. SOLE PROPRIETORSHIP
01
Ideal for small
startups or home-
based businesses.
02
Gives
entrepreneurs
full control over
operations and
decisions.
03
However, no
separation between
personal and
business assets —
owner is personally
liable for debts.

13. EXAMPLES
Barbershop or
Salon
Carinderia or
Eatery
Sari- Sari
Store
Freelance
Services
A
B
C
D

14. ADVANTAGES
1. Easy Setup
Simple registration,
minimal paperwork.
2. Low Cost
Only basic fees and
taxes required.
3. Easy Exit
Owner can close the
business anytime
without formalities.

15. Famous companies that begin as sole
proprietorship
National
Bookstore
Goldilocks
Jollibee food
Corporation
SM or
ShoeMart
A
B
C
D

16. A business owned by two or more individuals who
share profits, losses, and responsibilities.

17. General Partnership
Main Types
All partners share
control and liability.
Limited Partnership
One partner manages,
others invest and share
profits.

18. • Ideal for entrepreneurs
who want to co-own a
business with friends,
family, or partners.
• Promotes shared
decision-making, but
also shared liability for
actions and debts.
PARTNERSHI
P
pros/ cons

19. Advantages
01
Easy Formation
Minimal paperwork;
just register and
draft a partnership
agreement.
02
Growth Potential
Easier to get
loans or funding
with multiple
owners and
credit histories.
03
Special Taxation
Income and losses
are passed directly to
partners’ personal
tax returns (no
double taxation).

20. Famous businesses that starts as partnership
Apple
Twitter
Google
Microsoft
A
B
C
D

22. TYPES
General
Partnership
(GP)
Limited
Partnership
(LP)
Limited
Liability
Partnership
(LLP)

23. GENERAL
PARTNERSHIP
— Two or more
owners share
profits, losses, and
full liability.

24. Formation: Created once partners start
doing business; no state filing required.
Liability – No liability protection; all partners
share full risk.
Taxation: Income passes directly to
partners’ personal tax returns.

25. Reasons to choose
GP:
• Easy and inexpensive to form.
• Few ongoing requirements or legal
formalities.
• Recommended to have a written
Partnership Agreement to define roles.

26. LIMITED
PARTNERSHIP
— Includes at least one
general partner
(manages business) and
one or more limited
partners (investors).

27. Formation: Requires filing a Certificate of
Limited Partnership with the state.
Liability : limited to investment; not
involved in daily management.
Taxation: Profits and losses passed to
partners; only general partner pays self-
employment tax.

28. Reasons to choose
LP:
• Limits liability for silent partners.
• Ideal for short-term ventures or
investment projects (e.g., film production,
estate planning).
• Allows clear separation between
management and investors.

29. LIMITED
LIABILITY
PARTNERSHIP
— All partners have
limited liability and can
participate in
management.

30. Formation: Registered through the Secretary of State; often
limited to professional service businesses (e.g., doctors,
lawyers, architects).
Liability: Partners’ personal assets are protected from
business debts, except for their own professional malpractice.
Taxation: Income passes through to partners; no corporate-
level tax.

31. Reasons to choose
LLP:
• Ideal for professional service firms.
• Provides personal asset protection for each
partner.
• Reduces risk while allowing shared control.

33. Definitions
A legal entity
separate from
its owners, with
its own rights
and liabilities.
Can sue, be
sued, own
assets, and sell
ownership
through stocks.
Filing fees vary
depending on
the state and
type of
corporation.

34. Types of Corporations
1. C Corporation ( C Corp)
2. S Corporation ( S Corp)
3. B Corporation ( Benefit Corporation)
4. Closed Corporation
5. Open Corporation
6. Non-profit Corporation

35. C Corporation
— Owned by shareholders;
taxed separately from
owners.
— Allows unlimited investors;
ideal for large companies.
Examples: Apple, Amazon,
Bank of America, JPMorgan
Chase.

36. S Corporation
— Designed for small to
medium businesses.
— Avoids double taxation
(profits passed to owners’
personal tax returns).
— Owners enjoy limited
liability protection. Examples: Widgets Inc.

37. B Corporation
— For-profit but focused
on social and
environmental impact.
— Combines profit goals
with corporate social
responsibility.
Examples: The Body Shop
(advocates for
sustainability and ethical
causes).

38. Closed Corporation
— Privately owned by a small
group of shareholders.
— Stocks not publicly traded;
more operational flexibility.
Examples: Hobby Lobby
(family-owned business).

39. Open Corporation
— Publicly traded on the
stock market.
— Allows anyone to invest
and share in profits.
Examples: Microsoft, Ford
Motor Co.

40. Non-profit Corporation
— Formed to serve the public
or charitable causes.
— Tax-exempt status granted
for nonprofit activities.
1. Philippine Red Cross – Provides
disaster relief, blood donation, and
health services.
2. Gawad Kalinga – Builds homes and
helps poor communities.
3. World Wildlife Fund (WWF) – Protects
the environment and promotes
conservation.

41. Limited Liability:
Owners’
personal assets
are protected.
Continuity:
Business
continues even
after ownership
changes or
deaths.
Capital Access:
Easier to attract
large investments
and raise funds.
Advantages of a Corporation

42. • Apple Inc.
• Microsoft Corporation
• Amazon
SUCCESSFUL
CORPORATIONS
• Google
• Coca Cola

43. COOPERATIVE
Is a business owned and operated by
the same people it serves.
Members, called user-owners, vote on
decisions and share in the profits.

44. Key Features
Member-Owned:
Members both own and benefit from
the business.
Democratic Control:
Each member has one vote in
decision-making.
Profit Sharing:
Earnings are distributed among
members.

45. Advantages
• Increased Funding: May qualify for federal grants
to help start operations.
• Discounts & Better Service: Co-ops can buy in bulk
and get lower prices for members.

46. Business Formation
• Forming a co-op can be complex and requires a
legal business name (e.g., Inc. Or Ltd.).
• Filing fees vary by state or region.

47. Examples
1. Mondragon Corporation (Spain) – The world’s largest
worker-owned cooperative in manufacturing and finance.
2. Fonterra (New Zealand) – A global dairy cooperative owned
by New Zealand farmers.
3. National Confederation of Cooperatives (NATCCO) –
Philippines – The biggest cooperative network providing
financial and development services.

48. THATS ALL!