Forms and Types of Business Organization
Summary
TLDRIn this episode of 'Project Accounting,' the focus is on forms and types of business organization. It covers the identification of business forms by ownership nature, the advantages and disadvantages of four business forms, and a comparison of business types based on activities. The video explains single proprietorship, partnership, corporation, and cooperatives, detailing their characteristics, benefits, and drawbacks. It also discusses business types based on activities: service, merchandising, and manufacturing, providing examples for each. The episode aims to help viewers understand how businesses are structured to meet their goals.
Takeaways
- đ Accounting is about economic entities and business organizations describe how businesses are structured to meet their goals.
- đą The objective of most businesses is to maximize profits, but some operate with purposes other than profit, such as non-profit organizations.
- đ There are four basic categories of business organization: single proprietorship, partnership, corporation, and cooperatives.
- đ€ Single proprietorship is a business owned by one person, which is the simplest and most common form of business organization.
- đ€ Partnership is a business owned by two or more persons who contribute to a common fund with the intention of dividing the profits.
- đŹ A corporation is a separate legal entity with ownership divided into transferable shares of stocks, and it has the power of succession.
- đ€ Cooperatives are associations of persons with a common bond of interests who contribute equitably to the capital required to achieve their social, economic, and cultural needs.
- đŒ The advantages of a sole proprietorship include the owner keeping all profits, ease of formation, and operation.
- đ€ Partnerships offer advantages such as pooled capital, shared decision-making, and easier organization compared to corporations.
- đŒ Corporations have the advantage of limited liability for shareholders, continuous existence, and the ability to raise large capital.
- đ Cooperatives benefit from tax exemption on transactions with members, limited liability, and a focus on serving their members.
- đ Businesses can be classified based on their activities into service, merchandising, and manufacturing types.
Q & A
What is the main objective of most businesses?
-The main objective of most businesses is to maximize profits.
What are the different categories of business organizations based on how they are established, owned, and operated?
-The basic categories of business organizations are single proprietorship, partnership, corporation, and cooperatives.
What is a single proprietorship and what are its advantages and disadvantages?
-A single proprietorship is a form of business organization owned by one person. Advantages include the owner keeping all the profits, ease of formation, and operation. Disadvantages include limited capital, unlimited liability, and the business's life is tied to the owner's life.
How is a partnership defined and what are its key characteristics?
-A partnership is a contract where two or more persons contribute money, property, or industry to a common fund with the intention of dividing the profits. Key characteristics include shared profits, personal liability, and the need for a written agreement called articles of partnership.
What is a corporation and how is it different from other forms of business organizations?
-A corporation is an artificial being created by operation of law, with the right of succession and powers attributes. It is different as it is a separate legal entity with ownership divided into shares of stocks and is regulated by the Corporation Code of the Philippines.
What are the advantages and disadvantages of a corporation?
-Advantages of a corporation include limited liability, ease of raising capital, and continuous existence. Disadvantages include complex setup, double taxation of profits, and legal restrictions.
What is a cooperative and how is it structured?
-A cooperative is an autonomous and voluntarily joined association of persons with a common bond of interests, aiming to achieve their social, economic, and cultural needs by contributing equitably to the capital. It is structured with members contributing to the capital and is regulated by the Cooperative Development Authority.
What are the advantages and disadvantages of cooperatives?
-Advantages of cooperatives include tax exemption privileges and limited liability for members. Disadvantages include limited distribution of surplus, the need for continuous education programs, and potentially slower decision-making processes.
How are business organizations categorized based on their activities?
-Business organizations are categorized into service businesses, merchandising businesses, and manufacturing businesses based on their activities.
What are some examples of service businesses mentioned in the script?
-Examples of service businesses include public transport companies, beauty parlors, repair shops, and laundry shops.
What is the difference between a merchandising business and a manufacturing business?
-A merchandising business buys products at wholesale and sells them at retail, making a profit from the difference in prices. A manufacturing business, on the other hand, buys raw materials and combines them with labor and expenses to create a new product for sale.
Outlines
đą Introduction to Business Organizations
This paragraph introduces the topic of the video, which is about different forms and types of business organizations. It explains the purpose of businesses, which is typically to maximize profits, but can also include providing benefits to society. The paragraph outlines the basic categories of business organizations: single proprietorship, partnership, corporation, and cooperatives. It uses the example of a store called 'Sarasar' to illustrate the concept of a single proprietorship, where one person uses their savings to start a business and is the sole owner. The paragraph also discusses the advantages and disadvantages of a sole proprietorship, such as the owner keeping all profits, ease of formation, and unlimited liability.
đ€ Partnerships in Business
The second paragraph delves into partnerships, explaining that they are formed by two or more persons who contribute money, property, or industry to a common fund with the intention of sharing profits. It outlines the advantages of partnerships, such as the ability to raise more capital, ease and low cost of organization, and shared decision-making. However, it also points out the disadvantages, including the sharing of profits among partners, personal liability for wrongful acts of partners, and unlimited liability in lawsuits. The paragraph uses the example of a grocery store to illustrate how a partnership might be formed with two individuals contributing capital.
đ Corporations as Business Entities
This paragraph defines a corporation as an artificial being created by law, with the ability to succeed and own properties. It explains that a corporation is a separate legal entity with ownership divided into shares of stocks. The paragraph outlines the characteristics of a corporation, such as being regulated by the Corporation Code of the Philippines and the Securities and Exchange Commission (SEC). It also discusses the advantages and disadvantages of corporations, including limited liability for shareholders, ease of raising capital, continuous existence, and the ability to operate without the need for multiple shareholders in the case of a one-person corporation. Disadvantages include complex setup, double taxation of profits, and legal restrictions.
đ€ Cooperatives for Collective Benefits
The fourth paragraph focuses on cooperatives, which are defined as registered associations of persons with common interests who join together to achieve their social, economic, and cultural needs. It explains that cooperatives are characterized by member ownership, equitable contribution to capital, and patronage of their own products and services. The paragraph outlines the advantages and disadvantages of cooperatives, such as tax exemption for transactions with members, limited liability, and the need for continuous education programs. It also discusses the democratic nature of decision-making in cooperatives. The paragraph concludes by summarizing the different types of business organizations based on ownership and activities, such as service, merchandising, and manufacturing businesses.
Mindmap
Keywords
đĄSole Proprietorship
đĄPartnership
đĄCorporation
đĄCooperative
đĄLimited Liability
đĄUnlimited Liability
đĄService Business
đĄMerchandising Business
đĄManufacturing Business
đĄNon-Profit Organization (NPO)
Highlights
Introduction to forms and types of business organization
Definition of business organization and its role in meeting business goals
Explanation of different purposes of businesses beyond maximizing profits
Introduction to the basic categories of business organization
Definition and example of a single proprietorship
Advantages of single proprietorship including sole ownership and ease of operation
Disadvantages of single proprietorship such as unlimited liability and limited capital
Definition and example of a partnership
Advantages of partnership including shared decision-making and increased capital
Disadvantages of partnership such as shared profits and personal liability
Definition and characteristics of a corporation
Advantages of corporations including limited liability and continuous existence
Disadvantages of corporations such as complex setup and double taxation
Definition and characteristics of cooperatives
Advantages of cooperatives including tax exemption and limited liability
Disadvantages of cooperatives such as limited surplus distribution and need for continuous education
Types of business organization based on activities: service, merchandising, and manufacturing
Examples of service businesses and their operations
Examples of merchandising businesses and their operations
Examples of manufacturing businesses and their operations
Businesses that can be classified under more than one type
Summary of the different forms and types of business organizations discussed
Call to action for viewers to like, subscribe, and support the channel
Transcripts
[Music]
hi
everyone welcome back to another episode
of project accounting
so our topic for today is all about
forms and types of business organization
for this episode you will be able to
identify the forms of business
organization by nature of ownership
identify the advantage
and disadvantages of the four forms of
business organization
and compare and contrast the types of
business according to activities
so guyanas and abinadines at the first
episode
accounting is about economic entities
business organization describes
how businesses are structured and how
their structure helps them to meet their
goals
the objective of most businesses is to
maximize profits
however some businesses would operate
with purpose of other than tourist
profits like to provide benefits to
society guyanama npo or non-profit
organizations
so there are different categories of
business organization that relate to how
the business is established
owned and operated the basic categories
of business organization
are single proprietorship
partnership corporation and cooperatives
so tara let's define and know the
advantages and disadvantages of these
forms of business organization
suppose custom octagonasar is our store
that will need 10 000 pesos to start
and you use your ten thousand pesos
savings to start the set business
you are the sole owner of the said
sarasar store
this type of business is called soul or
single proprietorship
sole proprietorship is a form of
business organization which is owned by
one person
the simplest and the most common form of
business organization
it is not separate from the owners sole
proprietors must register with the
department of trade and
industry or dti so support iona sole
proprietorship management advantages and
disadvantages
so elenza advantage and sole
proprietorship i
first the owner keeps all the profits
evisabihin
go into business now and lastly sole
proprietorship is easy to form and
operate
as compared to partnership and
corporation most modeling italian sole
proprietorship cases
requirements
proprietorship first is the life of the
business
is limited to the life of the owner some
of you may ask
business
however please take note now upon the
death of the old owner
the business legally stopped so
considering
take over it is considered as the new
owner
the amount of capital is limited only by
the wealth of the proprietor
limited lion capital proprietor
and lastly owner has unlimited liability
business solar proprietorship is not
separate from the owner
in 25000 and become part owner of the
sarasar
store assuming he agrees and that is
called
partnership so according to the law and
partnership
partnership is a contract whereby two or
more persons bind themselves to
contribute
money property or industry to a common
fund
with the intention of dividing the
profits among themselves
so base a definition partnership is a
form of business
owned by two or more persons yuma owners
are called partners and the details of
the arrangement between the partners
are outlined in a written document
called articles of partnership
yoma partners in milan pera and pueden
elaine contribute
furthering property or knowledge about
the business
tapos divide among partners
based on their agreed sharing so
proprietorship that patmak registers a
dpi
and partnership demand at corporation
ida patmag registers a securities and
exchange commission or sec
so guyana's assault proprietorship may
ending advantages and disadvantages of
partnership
unanimous advantages and partnership i
hire capital
because two or more persons will
contribute to the commerce fund
so mass malaria talaga capital as
compared to sole proprietorship
next demand is partnership is easy and
inexpensive to organize as compared to
corporation
as it is formed by simple contract
between two or more persons
and lastly there is a share in decision
making
so mas madami ideas and puedema come up
support management business and
participation in business by more than
one person
makes it possible for closer supervision
illinois disadvantages no partnership i
there's a sharing of profits masmadaming
people to share in profits as these are
divided among the partners based on
agreed sharing
partners may also be subject to personal
liability for wrongful acts or omissions
of his or her associates
and gaian is a sole proprietorship
partners have unlimited liability
in a lawsuit the personal properties of
the partners can be held beyond their
contributions
and may be used to answer for any
liability of the partnership
grocery not just the sarasota store you
have only 25 000 pesos and your friend
one has twenty five thousand pesos
but kilam on a one million pesos to
start the set business
so para nagisa patio capital to start
your dream grocery store
business with that capital you may now
consider setting up a corporation
so as defining the corporation code of
the philippines
corporation is an artificial being
created by operation of law
having the right of succession and the
powers attributes and properties
expressly authorized by law or
incidental to its existence
so based on definition a corporation is
a business
organized as a separate legal entity or
artificial person
under the corporation law tapos new
ownership i divided into shares of
stocks
elanzimar characteristics the
corporation i
it is the law or the corporation code of
the philippines fingonagona corporation
and the sec or the securities and
exchange commission
is the government agency primarily
tasked to regulate private corporations
in the philippines
corporations should be formed by five or
more incorporators and the owners are
called stockholders or shareholders
the word corporation or incorporated
appears in the name of the npp
and the management of the business is
delegated by the shareholders to the
board of directors
with the passage of the revised
corporation code for the name register
with only one shareholder
in other words possible democrats turn a
company in the philippines without the
need for four other shareholders
this type of company is classified as a
one person corporation
or opc and especially beneficial for
micro
small and medium-sized businesses so
even if
only one person owns this corporation it
still has
limited liability in contrast to its
sole proprietorship
champre merending advantages and
disadvantages and corporation
in lenziman advantages now corporation i
limited liability
shareholders liability is limited
landsat among investigation
in this elaborating have boolean to
separate personal properties unlike sole
proprietorship and partnership
also it is easy to raise huge capital
madame kasich on shareholders so must
make it a great capital
as compared to sole proprietorship and
partnership except empress opc
then corporation enjoys continuous
existence because of power of succession
of 50 years or higher cooperation is
ownership illinois disadvantages ai
setting up is complex it is not easy to
organize
because of complicated legal
requirements and high costs
beyond double taxation of profits
government
taxon dividend and also
corporations are subject to several
legal restrictions
because corporations need to comply to
several provisions of the corporation
law
based on their capital contribution this
form of business organization is called
cooperatives
so as defined in the cooperative law
cooperative is an autonomous and julie
registered association of persons
with a common band of interests who have
voluntarily joined together to achieve
their social
economic and cultural needs and
aspirations by making equitable
contributions to the capital required
electional characteristics and
cooperatives i
human owners which are called members
contribute equitably to the capital of
the
opera team so in order to organize a
cooperative
there should be 15 or more natural
persons
the members are expected to patronize
their products and services
and the word cooperative appears in the
name of the entity
this form of business organization is
regulated by the cooperative development
authority or the cta
so an anonymous advantages and
disadvantages
and cooperatives first is tax exemption
privilege
generally cooperative online a
transaction with members
this islam is subject to any taxes and
fees imposed
under internal revenue laws and other
tax laws
merending
goal is to serve their members and
strengthen the cooperative movement by
working together
so guyana corporation cooperatives has
limited liability which means your
liability
members are limited to amount invested
illness among disadvantages and
cooperatives i
there's a limited distribution of
surplus limited language
members based on their capital
contribution
next demand cooperatives also requires
continuous education programs for
members
contribute effectively and efficiently
to the development of their cooperatives
and lastly mabaga and paguanama
decisions are cooperatives
then as a corporation each person may
have the opportunity to offer their
opinion on a matter before a final
choice gets made
next month is types of business
organization based on their activities
so business isn't engaged in any of the
following
service merchandising or manufacturing
service business offers professional
skills advice and consultations for a
fee
examples of these service businesses are
public transport companies
beauty parlor repair shops and laundry
shops
so next the man is young merchandising
merchandising business
buys at wholesale and later sells the
products at retail
they make a profit by selling the
merchandise or products
at prices that are higher than their
purchase costs
so examples of many merchandising or
trading businesses are grocery
supermarkets car dealers and appliances
stores
so next one is your manufacturing
business
so on manufacturing business demand it
buys raw materials and uses them in
making a new product
therefore combining raw materials labor
and expenses into a product for sale
later on
so examples at all issue factories
garment factories
and food processing plants so there are
businesses that may be classified under
more than one type of business
for example a bakery combines raw
materials in making lobes of bread
somali manufacturing business sha
whether in shang mckee turned on
customer order in small coffee table
servings of enzymata and hot coffee
so service business nutrients at the
same time
so to summarize what we have learned
today
there are four kinds of business
organization based on ownership
it includes single proprietorship which
is owned by one person the simplest and
the most common form of business
organization
partnership which is owned by two or
more persons with the intention of
dividing profits among themselves
corporation which is a business
organized as a separate legal entity
under the corporation law
with the ownership divided into
transferable shares of staffs
and cooperatives which is a jewly
registered association of persons
voluntarily joining together
to achieve their social economic and
cultural needs
meridian three types of business based
on their activities
it includes service business which
offers professional skills advice and
consultation for a fee
merchandising business which buys at a
wholesale and later sells the products
at retail
and manufacturing business which buys
raw materials and uses them in making a
new product
therefore combining raw materials labor
and expenses
into a product for sale later on
so if you like this video or if this
video helped you
please give a thumbs up and subscribe
for more episodes
thank you
[Music]
hmm
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