ABM1_Concepts and Principles.pptx

2. What do you think is JM Photocopying
Center’s type of business according to
ownership?
What do you think is JM Photocopying Center’s
type of business according to activity?

3. Types of Business According to
“OWNERSHIP”
Sole
Proprietorship
Partnership
Corporation Cooperative

4. Sole Proprietorship
• This is a business that is owned by a single individual who has full control
and authority in running this kind of business.
• The owner , called “Proprietor”
• The owner owns all the assets and is solely responsible for all the liabilities
of the company.
• This is common to small business entities like grocery store, repair
shop, beauty parlor and etc.
• The proprietor and proprietorship business is considered as one taxpayer/
• This must apply for a business trade name and be registered with the
DTI.

5. ADVANTAGES DISADVANTAGES
• Full Control of operations • Unlimited liability- The owner is legally obliged to pay all
nosiness debts.
• Easy to start, easy to dissolve • Limited life- the business ceases to operated if the owner
dies, becomes physically or mentally incapacitated, or
imprisoned
• All profits go directly to the owner • Difficulty in raising capital. The financial resources are
not enough to transform the business into a large scale
enterprise.
• Less Regulations • Benefits of specialization in business management are
not present in small scale proprietorship. There is only
one manager.
• The government taxes the owner and not the
business
• In some cases, The owner is the only employee
• Financial capital is small, registration requirements
are not difficult to comply with.
• Possibilities of conflicts or quarrels are minimized

6. Requirements for formation
It is registered through the Bureau of Trade Regulation and Consumer
Protection (BTRCP) of the DTI.
Applicable Laws
Republic Act No. 9178 Barangay Micro Business Enterprises (BDMBEs)
Act of 2002

7. Activity: Arrange the steps
• Secure a barangay permit in the barangay where the business will be located. This
permit should be renewed every year.
• Register the business with SSS, PhilHealth, HDMF or Pag-ibig.
• Register the preferred business name with DTI. The approved registration should
be renewed every five years.
• Apply for a business permit in the municipality where the business is situated.
Permit is renewable every year.
• Register the business with BIR. BIR requires a sole proprietorship business to pay
its registration fee every year.

8. Steps used in Registering Sole Proprietorship
• Register the preferred business name with DTI. The approved registration should
be renewed every five years.
• Secure a barangay permit in the barangay where the business will be located. This
permit should eb renewed every year.
• Apply for a business permit in the municipality where the business is situated.
Permit is renewable every year.
• Register the business with BIR. BIR requires a sole proprietorship business to pay
its registration fee every year.
• Register the business with SSS, PhilHealth, HDMF or Pag-ibig.

9. Partnership
• It is a form of business organization in which two or more
individuals to agree to own and operate a business
• The partners are normally involved in the management and
operation of the business.
• The profit and losses of the business are divided among the
partners as per partners’ agreement.
• Partnership generally treated like corporations for income tax
computation purposes.

10. The written agreement between or among partners
is called articles of co-partnership. It contains Name of
partnership, name of partners, place of business,
partnership’s effectivity date, nature of business,
investments of each partner and the corresponding
capital credits, rights, power, and duties of the partners,
accounting period, profit and loss sharing, compensation
for services offered by partners and dissolution
procedures.

11. Two types of Partnership
General partnership
Each partner is a general partner with unlimited liability.
Limited Partnership
With limited partner and atleast one general partner.
Limited partner has limited liability to the extent only of their
capital contribution.

12. ADVANTAGES DISADVANTAGES
• Increased potentials from two or more different
strengths
Unlimited liability of one or all owners
• Easy to form with proper agreements in its formation Limited life or lack of stability
• Less regulations compared to corporation High possibility of dispute and conflicts between
partners
• Better management
• Possibility of bigger resources than in single
proprietorship

13. Requirements
• Consist of two or more individuals to bind themselves to contribute money
or industry to a common fund, with intention of dividing the profits among
themselves.
• A partnership with more than 3,000.00 ca[ital must Register with the SEC
• A juridical entity

14. Applicable Laws
• Partnerships in the Philippines are governed by and covered under Articles
1767 to 1867 of Civil Code of the Philippines.

15. Steps used in registering Partnership
• Verify business name with the SEC
• File articles of co-partnership with SEC
• Register the business name with DTI(Optional)
• Secure a barangay permit in the place where the business is located.
• Apply business permit in the municipality where the business is located.
• Register the business with the BIR (BIR requires an annual registration fee)
• Register the business with the SSS, Philhealth, and HDMF

16. Corporation
• This business required to have five to thirteen incorporators.
• Sec. 2 of the Corporation Code of the Philippines defines corporation as “
an artificial being created by operation of law, having the right of succession
and the powers, attributes and properties expressly authorized by law or
incident to its existence.
• It has legal personality that is separate and distinct from the owners.
• The owners have limited liability and limited involvement from the operations.

17. Corporation
• The board of directors , who are elected by the owners themselves, will take
control of the corporation’s activities.
• Minimum paid up capital is 5,000.00.

18. A corporation in the Philippines can either
be…..
a. Stock Corporation- This is a corporation with capital stocks divided into
shares and authorized to distribute to the holders of such shares dividends or
allotments of the surplus profits on the basis of the shares held.
b. Non-Stock Corporation- This is a corporation organized principally for
public purposes such as foundations, charitable, educational , cultural, or similar
purposes and does not issue shares of stock to its members.

19. Articles of Incorporation
• Name of corporation
• Purpose of corporation
• Location of principal office of business
• Term of existence of the corporation
• Name
• Nationalities
• address of incorporators
• Name of board of directors
• Authorized share capital, types of shares
to be issued
• Par value per share
• Subscription amount
• Subscriber’s names
• Total paid subscriptions of each
subscriber

20. ADVANTAGES DISADVANTAGES
More source of funds Not easy to organize
Easy to transfer ownership More regulations to be followed
Liability of owner is limited Profit is taxed at the corporate tax rate
Unlimited commercial life Costly to incorporate
Has most effective means of raising money capital
for its operations by selling stocks and bonds
Stockholders are taxed again when profits are
distributed to them
Capable of getting the most efficient management There is a very impersonal or formal relationship
among the officers and employees

21. Requirements for formation
• Registered with SEC
• It must be created by or composed of at least 5 natural persons( up to
maximum of 15)
• Juridical persons, like other corporations or partnerships, cannot be
incorporators, although they may subsequently purchase shares and become
corporate shareholders/stockholders

22. Applicable Laws
• Batas Pambansa Blg. 68, The corporation Code of the Philippines

23. Steps Used in registering Corporation
• Verify business name with SEC
• Draft and execute the articles of incorporation and by-laws by incorporators
• Deposit the cash collected from subscription
• Register the business name with DTI(Optional)
• Secure the business permit in the place where business is located
• Register the business with the BIR
• Register the business with the SSS, PhilHealth, and HDMF

24. Cooperative
• Owned by group of individuals who also serve as benefactors to the
business endeavor.
• A cooperative usually requires at least 15 members for function.
• Usually, a board of directors and officers are elected to manage the business
operation.
• Members can become part of the cooperative by purchasing shares.

25. Types of Cooperative
• Credit cooperative
• Consumer cooperative
• Marketing cooperative
• Service Cooperative
• Multi-purpose cooperative
• Advocacy cooperative
• Agrarian reform cooperative
• Cooperative bank
• Dairy cooperative
• Education cooperative
• Electric cooperative
• Financial service cooperative
• Fisherman cooperative
• Health services cooperative
• Housing cooperative
• Insurance cooperative
• Transport cooperative
• Water service cooperative
• Workers cooperative

26. Advantages Disadvantages
Unlimited life. The change pf
members does not dissolve the
business.
Obtaining capital through investors
Democratic organization. Social
equality of members is the most
important component of
cooperatives.
One member-one-vote philosophy
Lack of membership and
participation. The corporation may
not fully function if members do not
involve themselves in the routine
business operation.

27. Steps Used in registering cooperative
• Prepare general statement to help measure the cooperative’s chance of
success
• Draft cooperative’s by-laws
• Draft the articles of corporation
• Secure bond of accountable officer(s)
• Register with Cooperative Development Authority

28. Types of Business
according to activities

29. Service business
Focus on providing intangible products, such as offering
professional skills, proposals and expertise.

30. Accounting Firm
Law Firm
Schools
Medical Clinic
banks
Hair salons and Spa
Repair shops

31. Advantage
No need for inventory
Skills can be improved and produce better service
Disadvantage
Services are harder to value
Less demand during economic downturns

32. Merchandising business
“buy and Sell”
Products are bought from manufacturers or other
merchandisers and are sold as is at a amount higher than the
purchase price

33. Sari-Sari store
Hardware
Drug stores
Cellphone Store
Jewelry Store
Supermarket

34. Advantages
Good merchandising attracts more customers.
It is flexible to changes
Disadvantages
Profits are highly dependents on prices set by merchandise
supplies
Merchandise inventory maybe perishable

35. Manufacturing business
Materials are bought to create a new product.

36. Car Manufacturer
Coca Cola
Gardenia factory
Sugar Cane Factory
Mill
Yakult factory
Garments Factory

37. Advantages
There is a continuous demand on manufacture goods
The creation of manufactures product leads to higher job
satisfaction
Disadvantages
Because of the scope of activities manufacturing firms are often
more labor and capital intensive
The cost of the manufactures products highly depends on the
price and availability of the raw materials