Business-ownership-and-organization.pptx

It's all about business

1. Business ownership and organization Group 4 members: Candila, marivic Caya, erika Cuba, Kenneth Dacillo, Glenda grace Tomes, charlie The Entrepreneurial Mind

2. Business ownership and organization The Entrepreneurial Mind

3. Objectives: Increase participant’s awareness of different forms of business ownership, thereby, allowing them to choose the right form of organization in putting up a new business. Help the participant’s analyze the advantages and disadvantages of each form or organization. Provide participant’s the legal requirements of each type of ownership and organization. 1 The Entrepreneurial Mind

4. Business ownership and organization refer to the structure and legal framework through which a business is owned, managed, and operated. There are various forms of business ownership and organization, each with its own characteristics, advantages, and disadvantages. 2 The Entrepreneurial Mind

5. Business ownership AND ORGANIZATION Forms of business ownership and organization: Sole Proprietorship Or single proprietorship is a form of business organization initiated, organized, owned or capitalized, and managed by a single person. As defined , the entrepreneur is the capitalist, the manager, and administrator, and in the beginning of the business , he practically does everything for the business. 3 The Entrepreneurial Mind

6. Business ownership and organization ADVANTAGES: Easily created and terminated . The sole proprietorship can be brought into existence without any formalities and is easily terminated. Direct, undiluted action . The ownership, control, and management are vested in one person. All rewards to owners . The owner works for himself or herself and determines his or her own destiny. 4 The Entrepreneurial Mind

7. Business ownership and organization 5 ADVANTAGES : Flexibility. The owner is free to adopt change readily. Minimum regulation and taxation . A proprietorship is generally free from control. The Entrepreneurial Mind

8. Business ownership and organization DISADVANTAGES: Unlimited liability. The owners must be prepared to satisfy business debts with their own personal assets if the business is unable to meet its obligations. Capital limitations. Equity capital is limited to the assets of the owner. This can be a serious restriction on growth and expansion. Perils of individual. If the owner dies or becomes seriously ill, the business is immediately jeopardized. 6 The Entrepreneurial Mind

9. Business ownership and organization 7 DISADVANTAGES : Limited skills and capabilities of the sole owner. The skills that can benefit the business are limited to the skills and capabilities of the owner, which might not be enough for the demands of the business. The Entrepreneurial Mind

10. Business ownership AND ORGANIZATION Forms of business ownership and organization: 2. Partnership A partnership is an association of two or more business partners who co-own a business for the purpose of making a profit. In a partnership, the co-owners (partners) share the assets, liabilities, and profits of the business according to the terms of partnership agreement. 8 The Entrepreneurial Mind

11. Business ownership and organization 9 Types of Partners 1. General Partner. A general partner is one who shares ownership and management of the business, and is liable to the extent of his s eparate property after all the assets of the p artnership are exhausted. 2. Limited Partners. They refer to the partners w ith limited financial liability and they do not t ake active role in the management of the firm. a limited partner is one who is liable only to the e xtent of his capital contribution. The Entrepreneurial Mind

12. Business ownership and organization 10 Types of Partners 3. Silent Partners . They refer to the partners w ho do not take active participation i n the operation of the business, but they are g enerally known to be partners of the business. 4. Dominant Partner. They are neither active i n the partnership nor they are generally known t o be associated with the business. The Entrepreneurial Mind

13. Business ownership and organization 11 Types of Partners 5. Capitalist Partner. This is the type of partner w ho contributes money or property to the common fund of the partnership. 6. Managing Partner. This is the partner who is d esignated to manage the operations of the business of the partnership. The Entrepreneurial Mind

14. Business ownership and organization 12 Types of Partners 7. Industrial Partner. This is the partner who c ontributes his knowledge or personal s ervices to the partnership. 8. Secret Partner . This is a partner who takes a ctive part in the business, but is not known to be a p artner by outside parties. The Entrepreneurial Mind

15. Business ownership and organization 13 Types of Partners 9 . Nominal Partner or partner by estoppel. This is a partner who is actually not a partner, but is held out or represented as a partner. 10. Liquidating Partner. This is a partner who is d esignated to wind up or settle the affairs of the p artnership after dissolution. The Entrepreneurial Mind

16. Business ownership and organization 14 ADVANTAGES : Pooling of resources. The partnership is useful in bringing together two or more persons who, as a group, have more business potential than as individuals. Ideas managerial talent, money, and fixed assets are frequently combined to produce a successful business. The Entrepreneurial Mind

17. Business ownership and organization 15 ADVANTAGES : Ability to obtain capital. The combined financial resources of all the partners stand behind the negotiations for business borrowing. Simplicity and incentive. Each partner is motivated by knowing that the success of the partnership is in part due to his or her own efforts. This encourages the partner to place the success of the business above their own self-interest. The Entrepreneurial Mind

18. Business ownership and organization 16 ADVANTAGES : Limited regulation and taxation . A partnership, much like a proprietorship, is subject to a minimum amount of regulation, and the partners are taxed on their own individual incomes. The Entrepreneurial Mind

19. Business ownership and organization DISADVANTAGES: Unlimited liability. All the partners are liable for the actions of each other. Tenuous existence. The partnership is subject to many eventualities that may terminate or disrupt its operation. It may be terminated by the death, insanity, or incapacity of a partner. Furthermore, serious disagreements may be insoluble. 17 The Entrepreneurial Mind

20. Business ownership and organization DISADVANTAGES: Independence on management harmony and coordination . The equality of the partners is simple in theory, but sometimes more difficult in practice. Partners may not agree on certain matters, or division of work assignments may prove awkward. Problems in share liquidation. A partner’s share is not easily disposed of except by agreement with the other partners. Attempting to dispose of a share to an outsider without proper valuation can be a problem. 18 The Entrepreneurial Mind

21. Business ownership Forms of business ownership and organization: Corporation Is an artificial being, invisible, intangible, and exists only in contemplation of law. Its owners are the stockholders who can sell their interests in the corporation without affecting the continuity of its operations because the life of the corporation is dependent or distinct from that of the owners or stockholders. 19 The Entrepreneurial Mind

22. Business ownership and organization 20 ADVANTAGES : Limited liability . The liability of a stockholder in a corporation is limited to the amount invested in the stock. Legal entity. The corporation is a legal entity. It may own property, but is not affected by the death or withdrawal of its stockholders, and is entitled to due process and equal protection under the Fourteenth Amendment of the Constitution. The Entrepreneurial Mind

23. Business ownership and organization 21 ADVANTAGES : Ready transferability of ownership. The shares of stock can be sold or transferred at will. Obtaining capital. Forming a new corporation with a salable idea can provide opportunities to sell stock to a variety of investors. Later, a corporation that has achieved some stability can usually bargain more effectively for a substantial amount of capital than either a proprietorship or partnership. The Entrepreneurial Mind

24. Business ownership and organization 22 ADVANTAGES : Employee benefits. The corporation has a better chance to create incentives for employees. Stock ownership, bonuses, pension plans, insurance programs, and other fringe benefits and the tax advantages that accompany such programs are more easily provided by the corporate form of organization. The Entrepreneurial Mind

25. Business ownership and organization DISADVANTAGES: Legal formality and cost. Creating a corporation may require considerable time, effort, and expense. In addition, the corporation is subject to considerably more control and more exacting compliance with regulations than proprietorship or partnership. Cost and time involved in the incorporation process. In view of the relatively large number of persons involved in the forming a corporation, the cost involved and the time requirement for the formation or incorporation registration process is somewhat longer and difficult. 23 The Entrepreneurial Mind

26. Business ownership and organization DISADVANTAGES: Taxation. The nature of a corporation is subject to certain tax regulations, which is more costly from the viewpoint of both national income tax and local government tax rules. Potential loss of control by founders of the corporation. The nature of a corporation, as well as the boundary between the powers of the owners/founders and managers of the business, may pose as a constraint and threat to the founders or stockholders of the corporation. 24 The Entrepreneurial Mind

27. Business ownership Forms of business ownership and organization: Cooperative Is defined by Republic Act 6938, otherwise known as the Cooperative Code of the Philippines, defined a cooperative as a duly registered association of persons, with a common interest Have voluntarily joined together to achieve a lawful common social or economic end 25 The Entrepreneurial Mind

28. Business ownership and organization Principles of Cooperative Open and voluntary membership. Democratic control. Limited interest on capital. Division on net surplus. Cooperative education. Cooperation among cooperatives. 26 The Entrepreneurial Mind

29. Business ownership and organization Advantages and Disadvantages of Cooperatives Tax privileges. Ability to provide direct benefits to its members and the entire community it serves in the form of relatively cheaper products and services consistent with its mission of providing services, rather than existence for purely profit motives. Inequality of profit distribution. The pro-masses or pro-poor bias of the cooperatives appears diametrically opposed to the entrepreneurs’ idea of servicing a market niche that is well-off enough to address its dream of profit. 27 The Entrepreneurial Mind

30. Business ownership and organization General requirement and procedures for registration Prospective entrepreneur must check with the government agencies concerned for updated or revised administrative rules and policies, as well as recent legislative enactment that may have to be complied with. 28 The Entrepreneurial Mind

31. Business ownership and organization Registering a single proprietorship Register the business name with the Department of Trade and Industry under the Bureau of Domestic Trade. 2 pcs. 2x2 picture Application fee or registration fee of P110.00 29 The Entrepreneurial Mind

32. Business ownership and organization Registering a partnership Prepare partnership agreement File the partnership agreement with the SEC Pay filing fee Evaluation of the application by the lawyer and staff of Corporate and Legal Department Release of approved registration is within 15-30 days 30

33. Business ownership and organization Registering a corporation Prepare Articles of Incorporation and By-laws, bank certification File Articles of Incorporation and By-Laws with SEC Pay registration fee Evaluation of application by lawyer and staff of Corporate and Legal Department Release of approved registration is within 15-30 days 31 The Entrepreneurial Mind

34. Business ownership and organization Registering a cooperative The following documents shall be forwarded to CDA: Four (4) copies of the economic survey with a general statement describing briefly the structure, purpose, economic feasibility, area of operation, size of membership, and other pertinent data Four (4) copies of Articles of Incorporation together with the bond of accountable officers 32 The Entrepreneurial Mind

35. Business ownership and organization Registering a cooperative The following documents shall be forwarded to CDA: Four (4) copies of By-laws Registration fee as prescribed by CDA 33 The Entrepreneurial Mind

36. Business ownership and organization Dealing with Local G overnment U nits The papers or documents issued by DTI, SEC, and CDA upon approval of the registration are instruments which are national in character. Local Government Code empowers the local government units to take full administrative control of their respective jurisdiction and make legislation, as well as ordinances (including tax/fees impositions) best fitting to the needs of the locality. 34 The Entrepreneurial Mind

37. Business ownership and organization To be able to finally operate the business and open the doors to the public, the entrepreneurs have to comply with all the permits and clearances imposed by the local government units. These are the following: Mayor’s permit Building permit Sanitary permit Cigar and liquor permit NBI clearance Barangay clearance 3 5 The Entrepreneurial Mind

38. Business ownership and organization Dealing with other government and private bodies Agencies like DENR and DepEd may have to be consulted for their requirements to the registering organization. The entrepreneur’s own neighborhood may likewise oppose a business proposition within the village or subdivision. 36 The Entrepreneurial Mind

39. Business ownership and organization How much money is needed? There is no specific or mandatory provision in law in putting up a sole proprietorship business. Unlike in partnership and corporation, Securities and Exchange Commission requires a bank certification attesting to the fact that indeed, the paid up capital requirement as indicated in the incorporation papers is deposited in the bank. Under the law, the minimum authorized capital requirement for the corporation is one hundred thousand pesos, and 25% of this must be subscribed capital must be paid up. 37 The Entrepreneurial Mind

40. Business ownership and organization The best form of ownership The summary of the pros and cons of various forms of business organization is shown below. It would give the entrepreneur the chance to evaluate his options. 38 PROPRIETORSHIP PARTNERSHIP CORPORATION Advantages: 1. Simplicity in creation 1. Ease of establishment 1. Limited liability of stockholders 2. Low cost to establish 2 . Division of profits 2. Ability to attract larger amount of capital The Entrepreneurial Mind

41. Business ownership and organization 39 PROPRIETORSHIP PARTNERSHIP CORPORATION Advantages: 3. Owner receives all profits 3. Larger pool of capital than proprietorship 3. Ability to have perpetual life 4. Owner retains all decision-making authority 4. Larger pool of talent than proprietorship 4. Ease of transfer ownership 5. No special legal restrictions 5. Ability to attract limited partners 5. Larger pool of skills, talents, and knowledge 6. Little government regulations 6. Potential for economic of scale operation The Entrepreneurial Mind

42. Business ownership and organization 40 PROPRIETORSHIP PARTNERSHIP CORPORATION Disadvantages: 1. Unlimited personal liability 1. Unlimited liability of general partners 1. Cost and time involved incorporation process 2. Limited skills and capabilities 2. Limited capability for capital accumulation 2. Subject to corporate taxes 3. Limited access to capital 3. Difficulty in disposing of partnership interests without dissolving partnership 3. Potential for diminished managerial incentives The Entrepreneurial Mind

43. Business ownership and organization 41 PROPRIETORSHIP PARTNERSHIP CORPORATION Disadvantages: 4. Lack of continuity of the business 4. Lack of continuity 4. Legal restriction and regulatory red tape 5. Potential for personal and authority conflicts 5. Potential loss of control by founder(s) 6. Partners are bound by law of agency

44. Thank you Group 4 members: Candila, Marivic Caya, Erika Cuba, Kenneth Dacillo, Glenda grace Tomes, Charlie The Entrepreneurial Mind

45. Thank you! The Entrepreneurial Mind