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    Business Organizations

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    Courtney Tirol
    This document compares and contrasts different types of business organizations: sole proprietorships, partnerships, joint accounts, and corporations. Sole proprietorships are owned by one person who has unlimited liability, while corporations have a separate legal identity from owners and liability is limited to investment. Partnerships are formed by agreement between two or more people and each partner is liable for debts. Corporations require a minimum of 5 organizers, are formed through legal registration, and shares can be freely transferred.

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    © All Rights Reserved
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    Business Organizations

    Uploaded by

    Courtney Tirol
    49 views2 pages
    This document compares and contrasts different types of business organizations: sole proprietorships, partnerships, joint accounts, and corporations. Sole proprietorships are owned by one person who has unlimited liability, while corporations have a separate legal identity from owners and liability is limited to investment. Partnerships are formed by agreement between two or more people and each partner is liable for debts. Corporations require a minimum of 5 organizers, are formed through legal registration, and shares can be freely transferred.

    Original Description:

    CORP

    Original Title

    BUSINESS ORGANIZATIONS

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    This document compares and contrasts different types of business organizations: sole proprietorships, partnerships, joint accounts, and corporations. Sole proprietorships are owned by one person who has unlimited liability, while corporations have a separate legal identity from owners and liability is limited to investment. Partnerships are formed by agreement between two or more people and each partner is liable for debts. Corporations require a minimum of 5 organizers, are formed through legal registration, and shares can be freely transferred.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    49 views2 pages

    Business Organizations

    Uploaded by

    Courtney Tirol
    This document compares and contrasts different types of business organizations: sole proprietorships, partnerships, joint accounts, and corporations. Sole proprietorships are owned by one person who has unlimited liability, while corporations have a separate legal identity from owners and liability is limited to investment. Partnerships are formed by agreement between two or more people and each partner is liable for debts. Corporations require a minimum of 5 organizers, are formed through legal registration, and shares can be freely transferred.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    Tirol, C.

    BUSINESS ORGANIZATION CHARTS

    Sole Proprietorship Corporation


    Neither a creature of statute nor contract; does not A creature of statute/contract.
    involve complexity or expense required of
    business associations.
    Unorganized business owned by a person Organized business of a group of persons
    No separate legal personality; owner has unlimited Has a separate legal personality distinct from
    personal liability for all the debts and obligations, persons in corporation.
    and all actions are enforced against him. SP can’t
    file an action separate from proprietor.

    Only available methods of obtaining funds are Contributions obtained from components
    personal contributions and loans from financial
    institutions or private sources (limited by potential
    of business, credit standing, extent of properties
    for collateral)
    Totally dependent on life of proprietor. If he dies, Death of one member of a corporation does not
    business operation may cease. He will have to rely necessarily dissolve the corporation.
    on his heirs or other interested persons to ensure
    the business will continue after his death.

    Joint Accounts Partnerships


    Juridical personality No juridical personality Has personality distinct from partners
    Business name No commercial name common to Can adopt a partnership name
    all participants can be adopted
    Management Only ostensible partner manages General partners are all managers in
    and transacts business in his own partnership
    name and under his individual
    liability
    Parties in case Only ostensible partner can be All general partners may be liable
    sued by and is liable to persons even up to extent of their
    transacting with the former personalities and may therefore be
    sued by third persons
    Tirol, C.

    Partnership Corporation
    Manner of creation By mere agreement Commences only from issuance of
    a Certificate of Registration of SEC
    or passage of a special law
    Number of organizers 2+ persons At least 5 persons
    Powers Subject to what partners More restricted in its powers
    agreed upon because of its limited personality
    Authority Mutual agency; each can bind Stockholders are not agents in
    the partnership absence of express authority
    Transfer of interest Interest in partnership cannot Corporate shares are freely
    be transferred without consent transferable without content of
    of other partners other stockholders
    Liability May be liable beyond their Liability of stockholders and
    investment members for corporate obligations
    is limited to their investment
    Rights of Succession No right of succession; death There is a right of succession
    of general partner dissolves
    partnership
    Juridical personality

    Groups of persons

    Capitals derived from components


    Similarities
    Distribution of profits

    Both act only through agents


    Organized only where there is law authorizing such

    Advantages of Corporations Disadvantages of Corporations

    1. The capacity to act as a legal unit 1. Prone to “double taxation”


    2. Limitation of or exemption from individual 2. Subject to greater governmental regulation
    liability of shareholders and control
    3. Continuity of existence 3. May be burdened with an inefficient
    4. Transferability of shares management if stockholders cannot
    5. Centralized management of board of organize to oppose management
    directors 4. Limited liability of stockholders may at times
    6. Professional management translate to limited liability to raise creditor
    7. Standardized method of organization, and capital
    finance 5. Harder to organize compared to other
    8. Easy capital generation business organizations
    6. Harder or more complicated to maintain
    7. “Owners” or stockholders do not participate
    in day-to-day management

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