Business Ownership and Organization PDF

OWNERSHIP AND ORGANIZATIO N DR. RAMON Y. HIPOLITO JR. Instructor hings to consider in selecting the best legal form of organizations: Ownership - How many owners will there be? Will their ownership be equal? Manag...

OWNERSHIP AND ORGANIZATIO N DR. RAMON Y. HIPOLITO JR. Instructor hings to consider in selecting the best legal form of organizations: Ownership - How many owners will there be? Will their ownership be equal? Management - will the owners also manage the firm? Financing - how much money is needed to start or purchase the business and what sources might prove it? Liability - is it desirable to separate the asset of the business from the personel asset of the owners? Incentives - will the business be able to provide the incentive necessary to attract the manegerial talent needed for growth and success? hings to consider in selecting the best legal form of organizations Retention of income - which form will provide the maximum income? Protection - will the asset values developed in the business over time be preserved if key persons become unavailable because of illness or death?  Types of BUSINESS OWNERSHIP Sole Proprietorship - is a business structure owned by an individual who generally has full control and authority over the business. The business owner is referred to as the “sole proprietor” and exclusively owns all assets and profits of the business.  Advantages of Sole Proprietorship Organizing a business as a sole proprietorship has several advantages. The most important advantage is having the freedom to make all the decisions. This form of business organization also has other advantages. You receive all profits and pay tax once a year as an individual. This type of business has easy set-up, simple licensing and paperwork, and few government. - Easy created and terminated - Direct and undiluted action - All rewards/profits to owner - Flexibility - Profit taxed once  Disadvantages of Sole Proprietorship With most choices people make, there is a positive side and a negative side. Though organizing your business as a sole proprietorship has definite disadvantages, this form of business organization also has several drawbacks: Limited capital Unlimited liability Limited human resources  Partnership - is owned by two or more persons who contribute capital to conduct business. The partners divide the profits of the business among themselves based on agreed  Types of PARTNERS  GENERAL PARTNER - is one who shares ownership and management of the business and is liable to the extent of his separate property after all the assets of the partnership are exhausted. LIMITED PARTNER - they refer to partners with limited financial liability and they do not take active role in the management of the firm. SILENT PARTNER - are those not taking active role in the operation of the business but are generally known to be partners of the business. DOMINANT PARTNER - they are neither active in the partnership nor they are generally known to be associated with the business. CAPITALIST PARTNER - a partner who contributes  MANAGING PARTNER - the partner who is designated to manage the operations of the business of the partnership. INDUSTRIAL PARTNER - the partner who contributes his knowledge to the personal services to the partnership. SECRET PARTNERSHIP - a partner who takes active part in the business but is not known to be partner by outside parties. NOMINAL PARTNER OR PARTNER BY ESTOPPEL - a partner who is actually not a partner but is held out our represented as a partner. LIQUIDATING PARTNER - a partner who is designated to wind up or settle the affairs of the partnership after  Advantages of the Partnership Many of the advantages of a partnership are similar to the advantages of a sole proprietorship. However, instead of being the only decision maker in a business, you would share decision making with your partners. More people can generate more ideas and possibly more money. There are several advantages of a partnership: Available capital Total control by partners Limited taxation and regulation Simplicity and incentives  Disadvantages of the Partnership While a partnership can offer many advantages, a number of problems can arise when several people own and operate a business. This form of business ownership can avoid some of the problems associated with sole proprietorships, but it also has disadvantages: Unlimited liability Possible disagreement among partners Shared profits  Corporation - is a business organization that has a separate legal personality from its owners. Ownership in a stock corporation is represented by shares of stock.  ADVANTAGES OF CORPORATION Establishing your business as a corporation has a number of advantages over a sole proprietorship and a partnership: Ability to raise capital Limited liability Continued life Separation of ownership and management  Disadvantages of Corporation Though the corporate form of ownership has a number of advantages, it also has several disadvantages: Complex and expensive set-up Slow decision-making process  COOPERATIVE - is an autonomous and duly registered association of persons, with a common bond of interest, who have voluntarily joined together to achieve their social, economic, and cultural needs and aspirations by making equitable contributions to the capital required, patronizing their products and  Types of COOPERATIVE S  CREDIT COOPERATIVE – promotes thrift among its members and create funds in order to grant loans for productive and provident purposes. CONSUMERS COOPERATIVE – procures and distributes commodities to its members and non-members. PRODUCERS COOPERATIVE – undertake joins production in agriculture and industry. MARKETING COOPERATIVE – engages in the supply of production inputs to members and markets their products. SERVICE COOPERATIVE – undertakes medical and dental care, hospitalization, transportation, insurance, housing, labor electric light and power, communication and other services.  MULTIPURPOSE COOPERATIVE – combines two or more of the business activities of the different types of cooperative. THAT’S ALL…. THANK YOU!