The Nature and Forms of Commercial Organization
CHAPTER 5
The Nature and forms of Commercial Organizations Commercial organizations may be classified into three (3) general classifications: 1. Private individual ownership 2. Public or government ownership 3. Mixed or both government and private ownership
1. Private Individuals Ownership
Any form of business ownership may be organized and would have certain advantages and disadvantages which the business organizer must have to evaluate. According to Martinez, Abasolo, and Carlos, the following are the questions to be considered in deciding the form of business: 1. Is it simple or difficult to form? 2. Is capital easy to rise? 3. What are the risks and the liabilities of the owners? 4. Who holds the authority and responsibility for the management and administration of the business? 5. What stability does the form offer? 6. Is it flexible? 7. What the legal status of this form is as applied to the particular business in mind? 8. What is the extent of government control? 9. What is the tax advantage of this form of organization? 10. Is the business environment favorable?
Private commercial organizations or business enterprises may take the following forms of ownership:
* Individual or Sole Proprietorship
It is a business owned by one person. This form of ownership is small, requires but little amount of capital, and is readily established under the control of one person. It refers to an individual who owns, manages, assumes all the risks, and derives all the products or profits from a business.
Advantages of Sole Proprietorship
* Easiest to establish. * Easiest to terminate. * Small amount of capital is required in starting a business. * Presence of personal element in managing the business. * Freedom and immediate action and control in operating the business. * Ownership of all profits. * Tax savings. * Minimum legal requirements. * High credit standing. * Business secrecy.
The Nature and forms of Commercial Organizations Commercial organizations may be classified into three (3) general classifications: 1. Private individual ownership 2. Public or government ownership 3. Mixed or both government and private ownership
1. Private Individuals Ownership
Any form of business ownership may be organized and would have certain advantages and disadvantages which the business organizer must have to evaluate. According to Martinez, Abasolo, and Carlos, the following are the questions to be considered in deciding the form of business: 1. Is it simple or difficult to form? 2. Is capital easy to rise? 3. What are the risks and the liabilities of the owners? 4. Who holds the authority and responsibility for the management and administration of the business? 5. What stability does the form offer? 6. Is it flexible? 7. What the legal status of this form is as applied to the particular business in mind? 8. What is the extent of government control? 9. What is the tax advantage of this form of organization? 10. Is the business environment favorable?
Private commercial organizations or business enterprises may take the following forms of ownership:
* Individual or Sole Proprietorship
It is a business owned by one person. This form of ownership is small, requires but little amount of capital, and is readily established under the control of one person. It refers to an individual who owns, manages, assumes all the risks, and derives all the products or profits from a business.
Advantages of Sole Proprietorship
* Easiest to establish. * Easiest to terminate. * Small amount of capital is required in starting a business. * Presence of personal element in managing the business. * Freedom and immediate action and control in operating the business. * Ownership of all profits. * Tax savings. * Minimum legal requirements. * High credit standing. * Business secrecy.