FORMS OF BUSINESS AND TYPES OF BUSINESS ACTIVITIES/OPERATIONS MIIGM1a4Forms of Business Organization Sole/Single Proprietorship A business owned and managed by only one person Advantages: » There are minimal costs and requirements in the formation >» The owner can withdraw the assets and profits of the business anytime at his or her own discretion » Decision making is solely in the hands of the owner > The duration of the life of the business solely depends on its owner tahForms of Business Organization University of Perpetual Sole/Single Proprietorship + Disadvantages: > > > Resources are limited as the capital is provided only by the owner Liability of the owner is unlimited as he or she is accountable to all creditors of the business Infusion of knowledge in the management of the business is limited to one person only, which is the ownerLoria ones f Perpetual Forms of Business Organization em-JONEL’ Partnership + A business organization owned and managed by two or more people who agree to contribute money, property, or industry to a common fund for the purpose of eaming a profit. + Advantages: > There are minimal costs and requirements in the formation » There is more funds contributed from the investment of the partnersLoria ones f Perpetual Forms of Business Organization em-JONEL’ Partnership + Advantages: > There is infusion of more knowledge, experience and skills from two or more partners » There can be division of labor between or among partners. + Disadvantages: > The partners are liable for the actions of each partner as a result of mutual agency > A general partner has unlimited liability if the other partners are limited partners or are rwerediaiel rTyUniversity of Perpetual eee eon a Forms of Business Organization Partnership + Disadvantages: > Disagreement between or among partners can lead to the withdrawal of one or more partners » The death, retirement, withdrawal or incapacity of a partner results in the dissolution of the partnership >» Admission of a new partner depends upon the approval of the other partners.of Business Organization Corporation A form of business organization managed by an elected board of directors. The investors are called stockholders and the unit of ownership is called shares of stock Advantages » The stockholders only have limited liability, as their liability extends only up to the amount of their capital investment. A corporation has continuous existence as its life is indefinite VvUniversity of Perpetual eee eon a Forms of Business Organization Corporation + Advantages > There is more infusion of funds from the stockholders or investors » Shares of stock can be transferred without the consent of other shareholders » Management of the corporation is vested upon its board of directors + Disadvantages » A corporation entails many requirements and is more costly than a partnershipof Business Organization Corporation Disadvantages > Vv Vs The government exercises strict control over corporations and imposes high taxes Shareholders have little or no participation in the management of the corporation Distribution of net income depends upon the declaration of dividends by the board of directors In large corporations, there is formal or impersonal relationship between employees and management due to the big number of _Loria ones f Perpetual Forms of Business Organization em-JONELTA |B an Cooperatives + A duly registered association of persons, with a common bond of interest, 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 principles. + Advantages > The prices of products offered to consumers are lower due to direct purchases of cooperativeLoria ones f Perpetual Forms of Business Organization em-JONEL’ Cooperatives + Advantages > Cooperatives are managed by the members themselves, thus, saving on management costs which leads to lower prices of products resulting to the benefit of the consumers. + Disadvantages > There is limited capital due to underprivileged members » The cooperative is strictly for members only and shares cannot be transferred to non-membersUniversity of Perpetual Types of Business Activities/Operations re Service + A type of business operation engaged in the rendering of services. + A service type of business earns based on the skill or quality of service it offers. Trading/Merchandising + A type of business engaged in the buying and selling of goods. + Merchandising includes the process of managing and marketing the products sold to its customers.Nene Types of Business Activities Operation Help System-JONELTA | Manufacturin A type of Bitingss engaged in the production of items to be sold. It involves the purchasing and converting of raw materials to finished goods. This type of business incurs overhead costs aside from the wages and materials used in the production of goods. There are certain expenses incurred even during periods of non-manufacturing such as rent, insurance, worker benefits and machine depreciation. oe