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Basic Finance
SOLE PROPRIETORSHIP
PARTNERSHIP
CORPORATION
COOPERATIVE
Yr&Section: BSBM – 2A
ADVANTAGES DISADVANTAGES
Division of profits Unlimited Liability of at least one
Larger pool of capital partner
Taxation There is a risk of disagreements and
friction among partners and
management
TYPES OF PARTNERSHIP
GENERAL PARTNERS - A general partnership is an arrangement by which two or more
persons agree to share in all assets, profits and financial and legal liabilities of a business.
Such partners have unlimited liability, which means their personal assets are liable to the
partnership's obligations. In fact, any partner can be sued for the entirety of a partnership's
business debts.
LIMITED PARTNERS- A limited partnership exists when two or more partners unite to
conduct a business in which one or more of the partners is liable only to the extent of the
amount of money that partner has invested. Limited partners do not receive dividends but enjoy
direct access to the flow of income and expenses. Some may also call this a limited liability
partnership. The main advantage to this structure is the owners are typically not liable for the
company's debts.
SILENT PARTNERS - A silent partner is an individual whose involvement in a partnership is
limited to providing capital to the business. A silent partner is seldom involved in the
partnership's daily operations and does not generally participate in management meetings. A
silent partner is also known as a limited partner, since his liability is typically limited to the
amount invested in the partnership.
SECRET PARTNERS- A secret partner, unlike a silent partner, has a say in the business'
operations, but the public is not aware that the secret partner is involved in the business. Her name
is not associated with the business in any way. A secret partner may have a tarnished reputation
from a previous business failure and doesn't want that reputation to taint the new business, or she
simply may prefer to operate anonymously.
DORMANT PARTNERS- a partner who takes no share in the activity business of a company
or partnership, but is entitled to a share of the profit, and subject to share in losses.
ADVANTAGES DISADVANTAGES
Limited Liability of the stockholders Creating a corporation is also more
Transferable ownership time consuming.
Larger pool of skills, expertise, and Creating a corporation is also more
knowledge. time consuming than any other type
Corporations can raise additional of business.
money by selling shares within the
corporation.
CO-OPERATIVE- Firm owned, controlled, and operated by a group of users for their own
benefit. Each member contributes equity capital, and shares in the control of the firm on the
basis of one-member, one-vote principle (and not in proportion to his or her equity contribution).
ADVANTAGES
Tax Advantages DISADVANTAGES
It has a democratic control: one
The limited share capital
member, one vote.
It has less incentive, and there’s also a
This type of organization has a
possibility of development of conflict
limited liability.
between members
The members work together
TYPES OF CO-OPERATIVE
Credit Cooperative- A credit union is a member-owned financial co-operative, controlled by
its members and operated on the principle of people helping people, providing its
members credit at competitive rates as well as other financial services.
Producer Cooperative- This refers to groups of people engaged in the agricultural arena:
farming, fishing, and forestry. The co-op members may be farmers, landowners or owners of
fishing operations.
Service Cooperative- is one which engages in medical and dental care, hospitalization,
transportation, insurance, housing, labor, electrical light and power, communication,
professional and other services.
Marketing Cooperative-With an aim of helping small producers in selling their products, these
societies are established. The producers who wish to obtain reasonable prices for their output are
the members of this society.