Fabm Chapter 4: Forms Of Business Organization

Front 1

What are the two ways you can classify a business?

Back 1

1. Ownership

2. Activities

Front 2

What are the four types of businesses according to ownership?

Back 2

1. Sole Proprietorship

2. Partnership

3. Corporation

4. Cooperative

Front 3

Sole Proprietorship

Back 3

1. Owned by only one individual

2. Done for practice of profession

3. Common to small businesses such as grocery stores, repair shops, and beauty parlors

4. TIN of business is TIN of owner

Front 4

What are the advantages of a Sole Proprietorship business?

Back 4

1. Simple; easy to start and dissolve

2. Full control of operations

3. All profits go directly to the owner

4. Less regulations

5. Owner is taxed, not the business

Front 5

What are the disadvantages of a Sole Proprietorship business ?

Back 5

1. Unlimited Liability

2. Limited Life

3. Difficulty in raising capital

Front 6

What are the steps used in registering a Sole Proprietorship business ?

Back 6

1. Register the name with DTI

2. Secure a barangay permit

3. Apply for a municipality permit

4. Register the business with BIR

5. Register the business with GMDs

Front 7

What does DTI stand for?

Back 7

Department of Trade and Industry

Front 8

The approved registration from DTI is renewable every __________

Back 8

Five years.

Front 9

The barangay permit and municipality permit is renewable every _________

Back 9

Year.

Front 10

BIR requires a business to pay its registration fee every __________

Back 10

Year.

Front 11

What does GMD stand for?

Back 11

Government Mandated Deductions

Front 12

What are examples of GMDs?

Back 12

1. Social Security System (SSS)

2. Philippine Health Insurance Corporation (PhilHealth)

3. Home Development Mutual Fund (HDMF) or Pagtutulungan sa Kinabukasan: Ikaw, Bangko, Industria at Gobyerno (Pag-Ibig)

Front 13

Partnership

Back 13

1. A business owned by two or more individuals

2. Has a separate legal entity

3. Partners are normally involved in the management and operation of the business

Front 14

Articles of Co-Partnership

Back 14

The written agreement between or among partners.

Front 15

What do the Articles of Co-Partnership contain?

Back 15

1. Name of partnership

2. Names of partners

3. Place of business

4. Partner's effectivity date

5. Nature of business

6. Investment of each partner and corresponding capital credit

7. Profit and loss sharing

8. Rights, power, and duties of the partners

9. Accounting period

10. Compensation for services offered by partners

11. Dissolution procedures

Front 16

What are the two types of Partnerships?

Back 16

1. General Partnerships

2. Limited Partnerships

Front 17

General Partnership

Back 17

Each partner is a general partner with unlimited liability.

Front 18

Limited Partnership

Back 18

Has at least one general partner among limited partners. The limited partners enjoy limited liability to the extent only of their capital contributions.

Front 19

What does LLP/LLC stand for?

Back 19

Limited Liability Partnership/Corporation

Front 20

What does dissolution mean?

Back 20

Ending of a partnership but continuation of business, if decided.

Front 21

What are the advantages of a Partnership?

Back 21

1. Easier to form than corporations

2. Less regulations compared to corporations

3. Increased potentials from two or more different strengths

Front 22

What are the disadvantages of a Partnership?

Back 22

1. Unlimited liability of one or all owners

2. Limited Life

3. High possibility of dispute and conflict

Front 23

What are the steps used in registering a Partnership?

Back 23

1. Verify the name with SEC

2. File articles of Co-Partnership with SEC

3. Register the business name with DTI (optional)

4. Secure a barangay permit

5. Apply for a municipality permit

6. Register the business with BIR

7. Register the business with GMDs

Front 24

Corporation

Back 24

1. Has five to fifteen incorporators

2. Has a separate legal entity

3. Owners have limited liability and involvement from the operations

4. Issues to its owners or shareholders shares or stocks which are evidenced by stock certificates

Front 25

Incorporators

Back 25

People who originally formed the corporation.

Front 26

"An artificial being created by operation of law, having the right of succession and the powers, attributes, and properties expressly authorized by law or incident to its existence."

This definition of a corporation is stated where?

Back 26

Section 2 of the Corporation Code of the Philippines

Front 27

Board of Directors

Back 27

1. Elected by the incorporators

2. Takes control of the corporation's activities

3. Applicable in profit corporations

Front 28

Complete the analogy.

Board of Directors : Profit Corporation = ______________ : Non-Profit Corporation

Back 28

Board of Trustees

Front 29

Complete the analogy.

Shareholders : Profit Corporation = ______________ : Non-Profit Corporation

Back 29

Members

Front 30

The existence of a corporation is evidenced by _____________

Back 30

1. Articles of Incorporation

2. By-laws

(Both of which are approved by SEC)

Front 31

Articles of Incorporation

Back 31

Details the powers and limitations bestowed by the government.

Front 32

What do the Articles of Incorporation contain?

Back 32

1. Name of corporation

2. Purpose of corporation

3. Location of principal office

4. Term of existence

5. Name, nationalities, and addresses of incorporators

6. Name of board of directors

7. Authorized share capital

8. Types of shares to be issued and par value per share

9. Subscription amount, subscribers' names, and their corresponding subscriptions

10. Total paid subscriptions of each subscriber

Front 33

By-laws

Back 33

Contain provisions for internal administration of the corporation.

Front 34

What do the By-laws of a Corporation contain?

Back 34

1. Date, place, and manner of calling the annual shareholders' meeting

2. Manner of conducting meetings

3. Conditions which may warrant special meetings

4. Manner of voting and use of proxies

5. Manner of electing board of directors and the number of directors

6. Term of office of directors

7. Manner of appointing officers

8. Authority and responsibilities of officers

9. Procedures to amend articles of incorporation

10. Procedures to amend by-laws

Front 35

What is the automatic life span of a corporation?

Back 35

50 years (although it can be extended).

Front 36

What are the advantages of a Corporation business?

Back 36

1. More sources of funds

2. Easy to transfer ownership

3. Liability is limited

4. Unlimited commercial life

Front 37

What are the disadvantages of a Corporation business?

Back 37

1. More regulations to be followed

2. Profit is taxed at the corporate tax rate (30%)

3. Costly to incorporate

4. Stockholders are taxed again

Front 38

Authorized Shares

Back 38

The maximum number of shares a shareholder may have (although it can be amended and expanded).

Front 39

What are the steps used in registering a Corporation?

Back 39

1. Verify business name with SEC

2. Draft articles of incorporation and by-laws

3. Deposit cash collected from subscription

4. File articles of incorporation and by-laws with SEC

5. Register business name with DTI (optional)

6. Secure a barangay permit

7. Apply for a municipality permit

8. Register the business with BIR

9. Register the business with GMDs

Front 40

Cooperative

Back 40

1. Owned by a group of individuals at least fifteen in size

2. Members should serve as benefactors and beneficiaries

3. A board of directors and officers are elected to manage business operations

4. Members can become a part of the cooperative by purchasing shares

5. Also has Articles of Cooperation and By-laws

6. Has a "one-member-one-vote" philosophy

Front 41

What are the two types of Cooperatives?

Back 41

1. Incorporated

2. Unincorporated

Front 42

What do the By-laws of a Cooperative contain?

Back 42

Rules and regulations governing the operation of the cooperative.

Front 43

What do the Articles of Cooperative contain?

Back 43

1. Name of the cooperative

2. Purpose of the cooperative

3. Term of existence of the cooperative

4. Amount of share capital

5. Names and residences of its contributors

6. Type of cooperative

Front 44

What are the advantages of a Cooperative business?

Back 44

1. Unlimited Life

2. Democratic organization

3. Social equality amongst members

Front 45

What are the disadvantages of a Cooperative?

Back 45

1. Big investors may choose to invest their money to other firms where their voting power is equal to their ownership interest.

2. Lack of membership and participation

Front 46

What are the steps used in registering a Cooperativebusiness?

Back 46

1. Prepare general statement to help measure the cooperative's chance of success

2. Draft cooperative's by-laws and articles of cooperation

3. Secure bond for accountable officer(s)

4. Register with CDA

Front 47

What does CDA stand for?

Back 47

Cooperative Development Authority

Front 48

What are the three types of businesses according to activity?

Back 48

1. Service

2. Merchandising

3. Manufacturing

Front 49

Service

Back 49

Focuses on providing intangible products.

Front 50

What are the advantages of a service business?

Back 50

1. No need for an inventory.

2. Skills can be improved.

Front 51

What are the disadvantages of a service business?

Back 51

1. Difficult to value.

2. Less demand during economic downturns.

Front 52

Merchandising

Back 52

Products are bought from manufacturers and are sold as it is at an amount higher than the purchase price.

Front 53

Merchandising businesses also refer to ___________

Back 53

Buy and Sell Businesses

Front 54

What are the advantages of a merchandising business?

Back 54

1. Good merchandising attracts more customers.

2. Is flexible to changes.

Front 55

What are the disadvantages of a merchandising business?

Back 55

1. Profits are highly dependent on prices set by merchandising suppliers.

2. Merchandise inventory may be perishable.

Front 56

Manufacturing

Back 56

Materials are bought to create a new product.

Front 57

What are the advantages of a manufacturing business?

Back 57

1. There is a continuous demand on manufactured goods.

2. The creation of a manufactured product leads to higher job satisfaction.

Front 58

Why does the creation of a manufactured product lead to higher job satisfaction?

Back 58

The manufacturer gets satisfaction knowing that their finished product is something that people need and use.

Front 59

What are the disadvantages of a manufacturing business?

Back 59

1. Because of its scope, manufacturing firms are often more labor and capital intensive.

2. The cost of the manufactured products highly depends on the price and availability of raw materials.

Front 60

True or False: Corporation is a business organized by five or more individuals.

Back 60

False (It's five to fifteen).

Front 61

True or False: Partnership is suited for the practice of profession.

Back 61

True (Corporations and Cooperatives are not).

Front 62

True or False: A Single Proprietorship's income is not taxed.

Back 62

True (as a business).

Front 63

True or False: Operations of recreational facilities like movie houses are classified as practice of profession.

Back 63

False.

Front 64

A partner who contributed skill, talents, or service to the partnership is called ___________

Back 64

Industrial Partner