FINANCE 102 8/5/11 FORMS OF BUSINESS ORGANIZATION 1.

Sole proprietorship (One Owner) Advantages Easy to organize Decisions can be easily made Financial operations are less complicated The owner is entitled to all the profits

LECTURES

DISADAVANTAGES Limited ability to raise capital Unlimited liabilities Limited ability to expand Business operations is the entire responsibility of the owner Net income is subject to tax regardless of whether it is withdrawn or not

2. PARTNERSHIP (A partnership of two or more) ARTICLE 1771: A partnership may be constituted in any form except where immovable property or real rights are contributed there to , in which case a public instrument shall be necessary ARTICLE 1772 ARTICLES OF CO PARTNERSHIP is the contract Between partners, name of partnership, name of the partners, Place of business, effective date of the partnership, nature of business, Investment of each partner and corresponding capital credit, Duration of contracts/rights/powers and duties of the partners, Accounting period, manner of dividing profits and losses, Liabilities of partners for partnership debts, Compensation for services offered by partners, Treatment of partners, Procedures for settlement of partners interest upon dissolution, provision for settlement of disputes

CLASSIFICATIONS of partnership based on object or scope of subject matter

UNIVERSAL PARTNERSHIP This may refer to the contribution by partner of all present property or of all profits PARTICULAR PARTNERSHIP Its objectives are determinate things, their use or fruits, or a specific undertaking, or the exercise of a profession or vocation CLASSIFICATIONS based on liability of partners for partnership obligations

GENERAL PARTNERSHIP In this kind of partnership, all partners are liable for partnership debts to the extent of their personal property after all the partnership assets have been exhausted LIMITED PARTNERSHIP This refers to partnership having one or more general partners and one or more limited partners or partner who are liable for partnership debts only to the extent of their capital contributors CLASIFICATIONS based on their contributions

CAPITALIST PARTNER He is a partner who contributes money or property to the capital of the partnership INDUSTRIAL PARTNER He is a partner who contributes his work, labor or industry