Single proprietorship is the simplest form of organization in most of the countries in the world. Unlike other forms of entity, it is usually not governed by special laws. A proprietorship is a type of business entity which legally has no separate existence from its owner. Hence, the limitations of liability enjoyed by a corporation and limited liability partnerships do not apply to sole proprietors. All debts of the business are debts of the owner.
The single proprietor has unlimited liability since creditors of his business may proceed not only against the assets and properties of his business but also after his own personal assets and properties. A sole proprietorship essentially refers to a natural person or individual doing business in his or her own name and in which there is only one owner and no partners. 2. Partnership A partnership is a form of business ownership in which partners share with each other the profits or losses of the business undertaking according to their agreements.
The consideration of a partnership whether it is a separate and distinct legal entity separate from its owners varies in different countries. In the United States, section 201 of the Revised Uniform Partnership Act (RUPA) of 1994 provides that a partnership is an entity distinct from its partners. A general partnership refers to an association of persons or an unincorporated company created by agreement by two or more persons in which the owners are all personally liable for any legal actions and debts the company may face.
A limited liability partnership is the same with general partnership, except that all the partners of the Limited Liability Partnership (LLP) are not personally liable like stockholders in a corporation. 3. Corporation A corporation is a type of business entity which has a legal entity separate and distinct from its owners (stockholders or shareholders). The owners of the corporation enjoy a limited liability advantage in the sense that the creditors of the corporation may only run after the assets and properties of the business or corporation but not on the personal assets and properties of the owners.
Corporations are more difficult to establish and register than proprietorships and partnerships because they are govern by different and special laws. However, establishment of corporations bear an accumulation of larger business assets and capital. Corporations can issue private or public shares of stock. They can also be a stock or a non-stock corporation. Corporations in most countries are subject to corporate income tax. It is also known that corporations are among the biggest companies in the world. 4. Cooperative.
A cooperative is defined by the International Co-operative Alliance’s Statement on the Co-operative Identity as an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise. A cooperative may also be defined as a business owned and controlled equally by the people who use its services or who work at it. In the cooperative, the members have a close association with the enterprise as producers or consumers of its products or services, or as its employees.
It is based on the values of self-help, self-responsibility, democracy and equality. Cooperatives may be generally classified as either consumer cooperatives or producer cooperatives. Cooperatives are closely related to collectives, which differ only in that profit-making or economic stability is placed secondary to adherence to social-justice principles. Examples of cooperatives are electric cooperative, credit cooperative and employees’ cooperative. 5. Joint Venture. A joint venture is an entity formed between two or more parties to undertake economic activity together.
The parties agree to create a new entity by both contributing equity, and they then share in the revenues, expenses, and control of the enterprise. The venture can be for one specific project only, or a continuing business relationship. Joint ventures are created in the essence of serving their purposes. They can be composed of a corporation, partnership or an individual. 5 Main Forms of Business Ownership Sole Proprietorship- A sole proprietorship is owned by only one person. This is the most common form of business ownership. General Partnership- A business owned by two or more people.
The partners share ownership and control of the business. Limited Partnership- A limited partnership consists of at least one general partner (controls the business) and at least one limited partner(investor). Forming a Corporation- A corporation is a business which is considered a separate entity from you; even having the legal rights of a person. There are two types of corporations; C Corporations and S Corporations. Limited Liability Company- The new “It” thing in the world of entrepreneurship. It’s popularity has been steadily growing in the past years.
What attracts entrepreneurs to this business structure is that it provides the limited liability provided by corporations with out all the restrictions and taxes. Business activities may be divided into three kinds: 1. Industry 2. Commerce 3. Services This classification is based on the nature of principal activity performed by the business enterprise. 1. Industries involve the conversion of raw materials into finished products or goods and the application of labor upon raw materials so that greater usefulness becomes possible after the process in the industrial group can be divided into extractive industries: farming, fishing, and mining.
The manufacturing industries use materials and supplies turned out by the extractive industries and change these raw materials into various articles of materials for further production of goods and new products. Ex. Hotdog/meat manufacturing company (CDO) 2. Commerce involves the process of buying and selling where the goods are moved from the point of production to the point of consumption. Consumption involves purchasing and the actual investment of capital in the merchandise handled with the intention of reselling at a profit. Ex. Shopping mall, etc.. 3.
Service enterprises are primarily concerned with the satisfaction of the needs and wants of the consumers. These are subdivided into two: a. Public and community service – ex. Transportation companies, news paper publishers, etc.. b. Professional or trade service – are businesses which capitalize on personal skill and talent for rendering service. Payment for such personalized service is usually in the form of fees which are sometimes called retainer’s fee. Ex. Law offices, certified public accountant, repair shops, management consultants, etc.. source:internet.