1.

SOLE PROPRIETORSHIP- This is the

simplest form of business organization: only
individual owns the business.
2. PARTNERSHIP- T h i  s refers to an
associationof two or more persons to carry the on
as co-
workers of a business for profit. “By the
contract of partnership , 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” (Article 1767, New Civil Code).
3. CORPORATION- This refers
to a separate body consisting of

at least five ind ividuals treated
by law or incident to its
existence” (Sec. 2, The
corporation Code of the
Philippines.
 SOLE PARTNERSHIP CORPORATION
PROPRIETORSHIP

OWNERSHIP One Two or more Five or more

Owner  owners owners
CAPITALIZATION Depends on Depends on Depends on
the needs of the needs of the type of the
business as
the business the business
prescribed by
law

LIFE OR Dependent Dependent Fifty years

TERM OF on the on the and
EXISTENCE
owner Partners renewable
 SOLE PARTNERSHIP CORPORATION
PROPRIETORSHIP

Management Managed by Managed by Managed by

Structure the sole
proprietor
 one or more
partners
the board of
directors
Profit To sole To partners To stockholders
based on based on
Distribution owner declaration of the
agreement or board of directors
based on law
REPORTING to to to
REQUIREMENTS

1. Municipal 1. Municipal 1. Municipal

Mayor Mayor Mayor
2. DTI 2. DTI 2. DTI
3. BIR 3. SEC 3. SEC
4. SSS 4. BIR 4. BIR
 SOLE PARTNERSHIP CORPORATION
PROPRIETORSHIP

5.Pag-Ibig or 5. SSS 5. SSS

HDMF
6. PhilHealth 6. Pag-Ibig or 6. Pag-Ibig or
HDMF HDMF
7. Philhealth 7.PhilHealth
Sole A partner pays Pays corporate
Income proprietorship individual income income tax,
taxation pays individual tax on his share of stockholders pay
income tax partnership profit on dividends
received

Some
partnerships are
exempted from
income tax, others
are taxed like
corporations
 SOLE
PROPRIETORSHIP PARTNERSHIP CORPORATION


Liability Unlimited Unlimited Limited
to Third liability of liability for liability of
Partry sole general stockholders
partners,
proprietor limited
liability for
limited
partners
 Sole Proprietorship
ADVANTAGES DISADVANTAGES
1. Easy to form, less  1 . Limited
government source of
requirements capital
2. Fast decision 2. Life may be
making, only one dependent on the life
person decides of the owner
3. Flexibility of 3. Management that
operations may be dependent
4. Suited to small on the capacity of the
business owner
 Partnership
 ADVANTA  DISADVANT
1. Easy
GES to form,
AGE S
subject
to less government 1. Unlimited source
requirements
of the partner for
2. Suited to the practice the debts of the
of a profession
partnership
3. Some are exempted
from income tax 2. Limited term of
4. Flexibility of existence
operation 3. Limited capital
 Corporation
 ADVANTA  DISADVANTA
GES GES
1. entity
Capacity as a legal  1 .articlesActivities
the of
incorporation and
2. Practically unlimitedlimitedby
life corporate by laws
3. Limited liability of 2. Possibility of abuse
stockholders for of power of officers
corporate debts 3. Subject to more
4. Wider source of governmental
capital requirements
 Classification of Partnership
 A s to type of business
1. Marketing or T r a  d i n g Partnership-
operation
is one engagd inm buying of goods and
selling he same without a change in
physical form.
2. Manufacturing Partnership- Business
purchases raw materials and converts
them into finished products.
3. Service Partnership- involves rendering
of professional or non-professional services.

Professional Servic  es-

Services are rendered by
accountants, lawyers, engineers,
doctors, and the like.
Non-Professional Services- Are those
offered by repair shops, tailoring shops,
and transportation companies and similar
types of business.
 A s to
Liability
1. General Partnership- Is one in which all the
partners are general partners who are liable for
partnership debts to t h e e x t e n t of their
professional property after all the partnership
assets have been exhausted.
2. Limited Partnership- is one formed by two or
more persons under the provisions on limited
partnership, having as members one or more
general partners and one or more limited
partners. The limited partners are liable only to
the extent of their capital contributions.
 Classification of Partners
 A s to
Liability
1. General Partner- Is t h e one who is liable

for partnership debts to the extent of his
personal property after all the partnership
assets have been exhausted.
2. Limited Partner- is one whose liability for
partnership debts is limited to his capital
contribution.
3. General-Limited partner- Is one who has all
the rights, powers, and subject to all the
restrictions of a general partner whose liability
is limited to his general contribution.
 A s to Contribuio
tn
1. Capitalist Partner- is one who contributes
money or p r o p e r t y t o the capital
otfhe partnership. 
2. Industrial partner- Is one who contributes
his work, labor, or industry to the
partnership.
3. Capitalist-Industrial Partner- Is one who
contributes money or property as well as
his work or industry to the partnership.
 Corporate Formation
 T h e formation of the corporation requires
much work, such as contracting people,
opening accounts w i t  h a bank and
necessary
preparing documents. These activities are
usually undertaken by a promoter. A promoter
is one who undertakes to form a corporation or
causes it to be formed for a specified purpose
or purposes; and who further undertakes to
procure for the corporation the capital, rights,
property, and organization necessary to
achieve such purpose or purposes. The costs
incurred in the formation of the corporation are
called organization costs.
 Articles of Incorporation
 A l l corporations organized under
Corporate Code s  h a l l file with the
the
SEC articles of incorporation in any of
the official languages; duly signed and
acknowledged by all the
incorporators, containing substantially
the following matters, except as
otherwise prescribed by the Corporate
Code or by special law:
1. The name of the corporation;
2. The specific purpose or purposes for
which the corpo ration is being

incorporated. When a corporation has
more than one stated purpose, the
article of incorporation shall state
which is the primary purpose and the
secondary purpose or purposes,
provided that a non-stock corporation
may not include a purpose which
would change or contradict its nature
as such;
3. The place where the principal office
of the corporation is located must be
within the Philippi nes.

4.The term for which the corporation is
to exist;
5.The names, nationalities, and
residences of the incorporators;
6.The number of directors or trustees
which shall not be less than five (5) or
more than fifteen (15)
7. The names, nationalities, and residences
of the persons who shall act as directors or
trustees;
8. If it will be a stock  corporation- the
amount of its authorized capital stock in
lawful money of the Philippines, the
number of shares into which it is divided;
and incase the shares are par value shares,
the par value of each, the names,
nationalities and residences of the original
subscribers, and the amount subscribed
and paid by each on his subscription, and
if some or all of the shares are without par
value- such facts must be stated.
9. If it will be a non-stock corporation,
the amount of its capital, the names,
nationalities and re sidences of
contributors
the

and the amount
contributed by each; and
10. Such other matters which are not
inconsistent with law and which the
incorporators may deem necessary and
convenient.
SEC Supervision and Control Corporations
 T h e Securities and Exchange
shakk have jurisdic 
Commissiontion,
supervision, and control over all
corporations, partnerships or
associations, who are the grantees of
primary franchise and/or license or
permits issued by the government to
operate in the Philippines; and in the
exercise of its authority, it shall have the
power to enlist the aid and support of any
and all enforcement agencies of the