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REFFERENCE

There are several types of business ownership. A sole proprietorship is owned by one person who has total control but unlimited liability. A partnership is owned by at least two people who share risks and profits but also control. A corporation requires at least five organizers, has continuous life, limited liability, and greater capacity to raise capital through stocks and bonds. A cooperative is an association of at least 15 people established for common services for its members with each member having an equal voice.

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112 views3 pages

REFFERENCE

There are several types of business ownership. A sole proprietorship is owned by one person who has total control but unlimited liability. A partnership is owned by at least two people who share risks and profits but also control. A corporation requires at least five organizers, has continuous life, limited liability, and greater capacity to raise capital through stocks and bonds. A cooperative is an association of at least 15 people established for common services for its members with each member having an equal voice.

Uploaded by

Honey Grace Abajar
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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 A business is always owned by someone. This can just be one person, or thousands.

So a business can have a number ofdifferent types of


ownership depending on the aims and objectives of the owners.
 Most businesses aim to make profit for their owners. Profits may not be the major objective, but in order to survive a business will need
make a profit in the long term.

 Sole Proprietorship

A sole trader is a business that is owned by one person

Often succeed –why?


 Can offer specialist services to customers.
 Can be sensitive to the needs of customers –since they are closer to the customer and react more quickly.
 Can cater for the needs of local people –a small business in a local area can build up a following in the community due to trust.

ADVANTAGES

 Total control of business by owner


 Cheap to start up
 Keep all profit
DISADVANTAGES
 Unlimited liability
 Difficult to raise finance
 May be difficult to specialize or enjoy economies of scale Problem with continuity if sole trader retires or dies
 Partnership

An association of at least two persons to engage in business.

 ADVANTAGES
 Spreads the risk across more people, so if the business gets into difficulty then there are more people to share the burden of debt
 Partner may bring money and resources to the business
 Partner may bring other skills and ideas to the business, complementing the work already done by the original partner
 Increased credibility with potential customers and suppliers – who may see dealing with the business as less risky than trading with
just a sole trader
 DISADVANTAGES
 Have to share profits
 Less control of business for individual

 Disputes over workload


 Problems if partners disagree over of direction of business

 CORPORATION
Requires a charter or articles of incorporation, formed by at least 5 organizers and has:
 legal personality
 continuous life
 Limited liability – a most important feature because corporations can become very large; limited liability is the feature that
has made corporations grow
 greater capacity to raise capital
Raising Capital in a Corporation
 Common stock – represents ownership capital – “risk” capital
 Preferred stock – stocks with higher claims on income distribution over common stock holders
 Borrowing

From financial institutions

Bonds (from the general public)

 COOPERATIVE
 Association of at least 15 persons.
 Established for common services for its members – mutual benefit & self-help.
 Patronage is usual result of mutual benefits.
 Each member with equal voice in cooperative, one-man one vote.
 Has attractive social organization features often promoted by governments.
Examples of Cooperatives

 Retail cooperative societies Credit cooperatives


 Farmers cooperatives
 Student cooperatives Condominium cooperatives (building owners)
 Transport cooperatives (Jeepney operators, jeepney drivers, etc.)
 Land reform beneficiary cooperatives

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