CALACA ACADEMY, INC.
Senior High School
A.Y 2021-2022
Business ethics
And social
responsibility
Prepared by:
Ms. Maryjane L. Capili
Module 1
The nature and form of business organization
identify forms of business organizations and their
characteristics
differentiate the forms of business organizations
YOUR
THOUGHTS?
Direction: What is the purpose of the things that you have seen in the picture?
Note: refer to worksheet number 1.
MOTIVATION
Direction: In your own Words make a reaction paper about the importance of
business to each other.
Note: refer to worksheet number 2.
LECTURE
What is business?
The term business refers to an organization or enterprising entity engaged in
commercial, industrial, or professional activities. Business can be for-Profit entities or they can
be non-profit organizations that operate to fulfill a charitable mission or further a social cause.
Business range in scale from sole proprietorships to international corporations and range in size
from small to large.
Business organization, an entity formed for the purpose of carrying on commercial
enterprise. Such an organization is predicated on systems of law governing contract and
exchange, property rights, and incorporation. Business enterprise customarily take one of three
forms: individual proprietorships, partnership, or limited-liability companies (or corporations).
There are Four Main Types of Business Organization.
SOLE PROPRIETORSHIP
The simplest and most common form of business ownership, sole proprietorship is a
business owned and run by someone for their own benefit. The business existence is entirely
dependent on the owner’s decisions, so when the owner dies, so does the business.
Advantages of sole proprietorship
All profits are subject to the owner
There is very little regulation for proprietorships
Owners have total flexibility when running the business
Very few requirements for starting often only a business license
Disadvantages:
Owner is 100% liable for business debts
Equity is limited to the owner’s personal resources
Ownership of proprietorship is difficult to transfer
No distinction between personal and business income
PARTNERSHIP
These come in two types: general and limited. In general partnerships, both owners
invest their money, property, labor, etc. to the business and are both 100% liable for business
debts. In other words, even if you invest a little into a general partnership, you are still
potentially responsible for all its debt. General partnership does not require a formal
agreement- partnership can be verbal or even implied between the two business owners.
Advantage of Partnership
Shared resources provides more capital for the business
Each partner shares the total profits of the company
Similar flexibility and simple design of a proprietorship
Inexpensive to establish a business partnership, formal or informal
Disadvantages:
Each partner is 100% responsible for debts and losses
Selling the business is difficult requires
Partnership ends when any partner decides to end it.
CORPORATION
Corporation are, for tax purposes, separate entities and are considered a legal person.
This means, among other things, that the profits generated by a corporation are taxed as the
“personal income” of the company. Then, any income distributed to the shareholders as
dividends or profits are taxed again as the personal income of the owners.
Advantages of Corporation
Limits liability of the owner to debts or losses
Profits and losses belong to the corporation
Can be transferred to new owners fairly easily
Personal assets cannot be seized to pay for business debts
Disadvantages:
Corporate operations are costly
Establishing a corporation is costly
Start a corporate business requires complex paperwork
With some exceptions, corporate income is taxed twice
LIMITED LIABILITY COMPANY
(LLC)
Similar to a limited partnership, an LLC provides owners with limited liability while
providing some of the income advantages of a partnerships. Essentially, the advantages of
partnership and corporations are combined in an LLC, mitigating some of the disadvantages of
each.
Advantages of LLC
Limits liability to the company owners for depths or losses
The profits of the LLC are shared by the owners without double-taxation
Disadvantages:
Ownership is limited by certain state laws
Agreements must be comprehensive and complex
Beginning an LLC has high costs due to legal and filing fees
Characteristics of Forms of Business Organization
Characteristics Sole General Partnership corporation
Proprietorship
Legal status Not separate Not separate Separate
Liability of owners Personal Personal No personal
Accounting status Separate separate separate
Tax status Owner taxable Partner taxable Taxable
Management authority Owner Every partner Hired
Until death or
Community Withdrawal of Until change of
owner partners Indefinite
Practice
Direction: In your own words, differentiate sole proprietorship, corporation and
partnership.
Note: refer to worksheet number 03.
Enrichment
Direction: Write an essay why do people engage in business? You may explain your
answer by providing example.
Note: Refer to worksheet number 4.
CALENDAR OF ACTIVITIES
DAY 1 – Pretest and Motivation
DAY 2 – Lecture
DAY 3 – Practice
DAY 4 - Enrichment
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Teacher: Maryjane L. Capili
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WORKSHEET NUMBER 4
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Direction: Write an essay why do people engage in business? You may explain your answer by
High
providing example.
Scho
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___________________________ ___________________________
Student’s Signature Parent/Gaurdian’s Signature
