Entrepreneurship Midterm L4 PDF

ENTREP MIDTERM L4 OWNERSHIP AND ORAGANIZATION ADVANTAGES 1. Easily created and terminated Things to consider in selecting the best 2. Direct, undiluted action legal form of organization: 3. All rewards to...

ENTREP MIDTERM L4 OWNERSHIP AND ORAGANIZATION ADVANTAGES 1. Easily created and terminated Things to consider in selecting the best 2. Direct, undiluted action legal form of organization: 3. All rewards to owners A. OWNERSHIP 4. Flexibility How many owners will there be? Will their 5. Minimum regulation and taxation ownership be equal? DISADVANTAGES B. MANAGEMENT 1. Unlimited liability Will the owners also manage the firm? 2. Capital limitations 3. Perils of individual C. FINANCING 3. Limited skills and capabilities of the sole How much money is needed to start or owner purchase the business and what sources might provide it? PARTNERSHIP A Partnership is an association of two or D. LIABILITY more business partners who co-own a Is it desirable to separate the assets of the business for the purpose of making a business from the personal assets of the profit. In a partnership, the co-owners owner. share the assets, liabilities, and profits of the business according to the terms of the E. INCENTIVES partnership agreement. Will the business be able to provide the incentive necessary to attract the TYPES OF PARTNERS managerial talent needed for growth and 1. GENERAL PARTNER success? A general partner is one who shares ownership and management of the F. TAXATION business, and is liable to the extent of his What legal form will minimize the total tax separate property after all the assets of load impose on the business? the partnership are exhausted. G. RETENTION OF INCOME 2. LIMITED PARTNERS Which form will provide the maximum They refer to partners with limited financial income? liability and they do not take active role in the management of the firm. H. PROTECTION Will the asset values developed in the 3. SILENT PARTNERS business over time be preserved if key They refer to partners who do not take persons become unavailable because of active participation in the operation of the illness or death? business, but they are generally known to be partners of the business. SOLE PROPRIETORSHIP The Sole Proprietorship or single 4. DOMINANT PARTNERS proprietorship is a form of business They are neither active in the partnership organization initiated, organized, owned or nor they are generally known to be capitalized, and managed by a single associated with the business. person. 5. CAPITALIST PARTNER contemplation of law. Its owners are the This is the type of partners who stockholders who can sell their interest in contributes money or property to the corporation without affecting the continuity common fund of the partnership. of its operations. 6. MANAGING PARTNER ADVANTAGES This is the type of partner who is 1. Limited liability designated to manage the operations of 2. Legal entity the business of the partnership. 3. Ready transferability of ownership 4. Obtaining capital 7. INDUSTRIAL PARTNER 5. Employee benefits This is the type of partner who contributes his knowledge or personal services to the DISADVANTAGES partnership. 1. Legal formality and cost 2. Cost and time involved in the 8. SECRET PARTNER incorporation process This is the type of partner who takes 3. Taxation active part in the business, but is not 4. Potential loss of control founders of the known to be a partner by outside parties. corporations 9. NOMINAL PARTNER OR PARTNER COOPERATIVE BY ESTOPPEL Republic Act 6938, otherwise known as This is the type of partner who is actually the cooperative code of the Philippines, not a partner, but is held out or defined a cooperative as a duly registered represented as a partner. association of persons, with a common bond of interest, who have voluntarily 10. LIQUIDATING PARTNER joined together to achieve a lawful This is a partner who is designated to wind common social or economic end. up or settle the affairs of the partnership after dissolution. ADVANTAGES 1. Tax privileges 2. Ability to provide direct benefits to its ADVANTAGES members and the entire community. 1. Pooling of resources 2. Ability to obtain capital DISADVANTAGES 3. Simplicity and incentive 1. Inequality of profit distribution 4. Limited regulation and taxation To be able to finally operate the business DISADVANTAGES and open the doors tk the public, the 1. Unlimited liability entrepreneurs have to comply with all 2. Tenuous existence permits and clearances imposed by the 3. Independence on management local government units. harmony and coordination 1. Mayor’s permit 4. Problems in share liquidation 2. Building permit 3. Sanitary permit CORPORATION 4. Cigar and Liquor permit A Corporation is an artificial being, 5. NBI Clearance invisible, intangible, and exists only in 6. Barangay Clearance