Lesson 2: Forms of business ownership Flashcards
(46 cards)
4 forms of business
-Sole Proprietorship
- Partnership
- Corporation
- Cooperatives
It is a business owned and operated by
single person.
SOLE /SINGLE
PROPRIETORSHIP
Unique advantages of a Sole Proprietorship
- Ease and Cost Formation
- Secrecy
-Distribution and Use of Profits - Control of the Business
- Government Regulations
-Taxation - Closing the Business
is
spared from various
government rules
which cover
partnerships and
corporations.
Government Regulations for Sole Proprietorship
The net income of
the _____________is
regarded as the
personal income of
the sole owner and
is taxed accordingly.
Sole proprietorship
Disadvantages of Sole
Proprietorship
-Possibility that the owner lacks ability and experience;
-Difficulty in raising additional capital;
- Limited life of the firm; and
- Unlimited liability of the proprietor.
Is an association of two or more persons who have
agreed to contribute money, property , or industry to a
common fund with the intention of dividing the profits
among themselves.
Partnership
Two or more persons may for a _______ for the
exercise of a profession.
Partnership
Partnership are also called
General Professional Partnership
The owners of a partnership are called
Partners
example of partnership
-Law Firms
-Certified Public Accountants
-Medical Clinics
Easier to form than a corporation.
Partnership
It may be a small firms selling goods or
services at a single locations, or a larger
enterprise selling goods or services at
different locations.
Partnership
may be composed of TWO
PARTNERS only or dozens of partners.
Partnership
It is contractual in nature because it is
formed through a contract between or
among the partners.
Partnership
can be formed by either an
oral contract /agreement or by a written
contract/agreement.
Partnership
A written contract agreement is not
required in ____.
Partnership
Essential Requisites of a Partnership
-Contract Partnership which may be oral or written
-Two or more persons who have the legal capacity to
enter into contract of partnership
-Valuable contribution to a common fund which may
consist of money, property or industry
-An intention to divide the profits between or among
the partners; and
-Lawful purpose (s)
7 characteristics of a partnership
- Mutual agency
- Voluntary association
- Based on contract
- Limited life
- Unlimited liability
- Division of profit
- Co-ownership of contributed assets.
Advantages of partnership
- Ease of formation
- Allows pooling of financial
resources - Allows pooling of skills, expertise,
and experience of partners - Less government control,
supervision and intervention.
Is an artificial body organized in
accordance with the provision of law in
which ownership is divided into shares of
stocks.
Corporation
How many person are in a corporation?
5 or more ( including incorporators)
Incorporators are called
Shareholders or Stockholders
Evidence of Investment are
Stock Certificates
