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Legal Forms of Business Entities

The document outlines different legal forms of business organizations including sole proprietorships, partnerships, limited liability companies, corporations, and cooperatives. It describes key characteristics such as ownership structure and legal responsibilities for each form. Sole proprietorships are owned and managed by one individual who has unlimited liability, while partnerships have multiple owners who share profits/losses. Corporations separate ownership and management with stockholders electing a board of directors to oversee company activities. Cooperatives are voluntary organizations that are open to all and aim to meet member needs.

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Naomi Aira Gole Cruz
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113 views2 pages

Legal Forms of Business Entities

The document outlines different legal forms of business organizations including sole proprietorships, partnerships, limited liability companies, corporations, and cooperatives. It describes key characteristics such as ownership structure and legal responsibilities for each form. Sole proprietorships are owned and managed by one individual who has unlimited liability, while partnerships have multiple owners who share profits/losses. Corporations separate ownership and management with stockholders electing a board of directors to oversee company activities. Cooperatives are voluntary organizations that are open to all and aim to meet member needs.

Uploaded by

Naomi Aira Gole Cruz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

LEGAL FORMS OF ORGANIZATIONS

Characteristics Responsibilities METHODS OF


Sole  Owned by one person


Free from legal formalities  Must file business permits,
business name and self- DEPARTMENTALIZATION
Proprietorship 
Unlimited liability
Sole management employment tax.
 Boss of his own company
 All the decisions are taken by the proprietor
himself  Fund Raising
 Freedom regarding selection of business  Accounting payrolls to paying
creditors
 Proprietor and Proprietorship are one

Partnership  Owned by more than one person


 Legal relationships formed by agreement of
 Individual responsibility of
maintaining business and financial
co-owners records
 Profits, losses and workloads are divided
 Equal shares in paying tax and
among the partners
 Proprietors and Proprietorship are one
debts
 Legal duty to fulfill roles
 Joint liabilities
 Each member should fulfill their
 Separate Legal Existence
Limited Liability  Flexibility to choose the how they are  Dissenter’s rights
taxed  Members are required to make
Company  Owners are its own members capital contributions
 Members are actively involved in day-to-  Members are not liable for LLC
day activities debts
 Changes are made through votes  Members are responsible for own
 Profits are divided proportional to capital actions
investment

Corporation  Owners are stockholders but managed by


employees  Pays taxes on its profits
 Act in best interests of its
 Private or public profit or non-profit
shareholders
organization
 Conduct business to earn highest
 Stockholders have the right to vote for
possible profit for stockholders
board of Directors
 Separate legal entity conducting business  Owners are not liable for
in its own name company’s debts
 Obtain capital by selling stocks or bonds

  Voluntary and open to all persons able  Sensitive to the needs of its
Cooperative and willing to accept the responsibilities
of organizations
members and balance their
conflicting interests.
 Provide useful service to its members and  Educate members of the
the society organization
 Education and training to its members to  Directors must participate in the
develop well-organized movement. affairs of the cooperative
 Directors oversee the management of the  Rely on the information presented
by the officer or employee
cooperative and decision making
 Must act in the best interest of the
cooperative
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