Types of Business

What do you think is JM Photocopying Center’s type
of business according to ownership?
What do you think is JM Photocopying Center’s

type of business according to activity?
Types of Business According to
“OWNERSHIP”
Sole
Partnership
Proprietorship
Corporation Cooperative
Sole Proprietorship
• This is a business that is owned by a single individual who has full
control and authority in running this kind of business.
• The owner , called “Proprietor”
• The owner owns all the assets and is solely responsible for all the liabilities of the
company.
• This is common to small business entities like grocery store, repair shop, beauty
parlor and etc.
• The proprietor and proprietorship business is considered as one taxpayer/

• This must apply for a business trade name and be registered with the DTI.
ADVANTAGES DISADVANTAGES
• Full Control of operations • Unlimited liability- The owner is legally obliged to pay
all nosiness debts.
• Easy to start, easy to dissolve • Limited life- the business ceases to operated if the
owner dies, becomes physically or mentally
incapacitated, or imprisoned
• All profits go directly to the owner • Difficulty in raising capital. The financial resources are
not enough to transform the business into a large scale
enterprise.
• Less Regulations • Benefits of specialization in business management are
not present in small scale proprietorship. There is only
one manager.
• The government taxes the owner and not the • In some cases, The owner is the only employee
business
• Financial capital is small, registration requirements
are not difficult to comply with.
• Possibilities of conflicts or quarrels are minimized

Requirements for formation
It is registered through the Bureau of Trade Regulation and Consumer
Protection (BTRCP) of the DTI.
Applicable Laws
Republic Act No. 9178 Barangay Micro Business Enterprises
(BDMBEs) Act of 2002
Activity: Arrange the steps
• Secure a barangay permit in the barangay where the business will be located. This
permit should be renewed every year.
• Register the business with SSS, PhilHealth, HDMF or Pag-ibig.
• Register the preferred business name with DTI. The approved registration should be
renewed every five years.
• Apply for a business permit in the municipality where the business is situated. Permit
is renewable every year.
• Register the business with BIR. BIR requires a sole proprietorship business to pay its
registration fee every year.
Steps used in Registering Sole
Proprietorship
• Register the preferred business name with DTI. The approved registration should be
renewed every five years.
• Secure a barangay permit in the barangay where the business will be located. This
permit should eb renewed every year.
• Apply for a business permit in the municipality where the business is situated. Permit
is renewable every year.
• Register the business with BIR. BIR requires a sole proprietorship business to pay its
registration fee every year.
• Register the business with SSS, PhilHealth, HDMF or Pag-ibig.
Partnership
• It is a form of business organization in which two or more
individuals to agree to own and operate a business
• The partners are normally involved in the management and
operation of the business.
• The profit and losses of the business are divided among the
partners as per partners’ agreement.
• Partnership generally treated like corporations for income
tax computation purposes.
The written agreement between or among partners is
called articles of co-partnership. It contains Name of
partnership, name of partners, place of business, partnership’s
effectivity date, nature of business, investments of each
partner and the corresponding capital credits, rights, power,
and duties of the partners, accounting period, profit and loss
sharing, compensation for services offered by partners and
dissolution procedures.
Two types of Partnership
General partnership
Each partner is a general partner with unlimited liability.
Limited Partnership
With limited partner and atleast one general partner.

Limited partner has limited liability to the extent only of their
capital contribution.
• Increased potentials from two or more different Unlimited liability of one or all owners
strengths
• Easy to form with proper agreements in its Limited life or lack of stability
formation
• Less regulations compared to corporation High possibility of dispute and conflicts between
partners
• Better management
• Possibility of bigger resources than in single

proprietorship
Requirements
• Consist of two or more individuals to bind themselves to contribute
money or industry to a common fund, with intention of dividing the
profits among themselves.
• A partnership with more than 3,000.00 ca[ital must Register with the SEC
• A juridical entity
Applicable Laws
• Partnerships in the Philippines are governed by and covered under Articles
1767 to 1867 of Civil Code of the Philippines.
Steps used in registering Partnership
• Verify business name with the SEC
• File articles of co-partnership with SEC
• Register the business name with DTI(Optional)
• Secure a barangay permit in the place where the business is located.
• Apply business permit in the municipality where the business is located.
• Register the business with the BIR (BIR requires an annual registration fee)
• Register the business with the SSS, Philhealth, and HDMF
Corporation
• This business required to have five to thirteen incorporators.
• Sec. 2 of the Corporation Code of the Philippines defines corporation as “
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.
• It has legal personality that is separate and distinct from the owners.
• The owners have limited liability and limited involvement from the operations.
Corporation
• The board of directors , who are elected by the owners themselves, will
take control of the corporation’s activities.
• Minimum paid up capital is 5,000.00.
A corporation in the Philippines can either
be…..
a. Stock Corporation- This is a corporation with capital stocks divided into
shares and authorized to distribute to the holders of such shares dividends or
allotments of the surplus profits on the basis of the shares held.
b. Non-Stock Corporation- This is a corporation organized principally for

public purposes such as foundations, charitable, educational , cultural, or
similar purposes and does not issue shares of stock to its members.
Articles of Incorporation
• Name of corporation • Name of board of directors

• Purpose of corporation • Authorized share capital, types of
• Location of principal office of shares to be issued
business • Par value per share
• Term of existence of the corporation • Subscription amount
• Name • Subscriber’s names
• Nationalities • Total paid subscriptions of each
• address of incorporators subscriber
More source of funds Not easy to organize
Easy to transfer ownership More regulations to be followed
Liability of owner is limited Profit is taxed at the corporate tax rate
Unlimited commercial life Costly to incorporate
Has most effective means of raising money Stockholders are taxed again when profits are
capital for its operations by selling stocks and distributed to them
bonds
Capable of getting the most efficient management There is a very impersonal or formal relationship
among the officers and employees
Requirements for formation
• Registered with SEC
• It must be created by or composed of at least 5 natural persons( up to
maximum of 15)
• Juridical persons, like other corporations or partnerships, cannot be
incorporators, although they may subsequently purchase shares and
become corporate shareholders/stockholders
Applicable Laws
• Batas Pambansa Blg. 68, The corporation Code of the Philippines

Steps Used in registering Corporation
• Verify business name with SEC
• Draft and execute the articles of incorporation and by-laws by incorporators
• Deposit the cash collected from subscription
• Register the business name with DTI(Optional)
• Secure the business permit in the place where business is located
• Register the business with the BIR
• Register the business with the SSS, PhilHealth, and HDMF
Cooperative
• Owned by group of individuals who also serve as benefactors to the
business endeavor.
• A cooperative usually requires at least 15 members for function.
• Usually, a board of directors and officers are elected to manage the business operation.
• Members can become part of the cooperative by purchasing shares.

Types of Cooperative
• Credit cooperative • Education cooperative
• Consumer cooperative • Electric cooperative
• Marketing cooperative • Financial service cooperative

• Fisherman cooperative
• Service Cooperative
• Health services cooperative
• Multi-purpose cooperative
• Housing cooperative
• Advocacy cooperative
• Insurance cooperative
• Agrarian reform cooperative • Transport cooperative
• Cooperative bank • Water service cooperative
• Dairy cooperative • Workers cooperative
Advantages Disadvantages
Unlimited life. The change pf Obtaining capital through investors

members does not dissolve the
business.
Democratic organization. Social One member-one-vote philosophy
equality of members is the most
important component of
cooperatives.
Lack of membership and
participation. The corporation may
not fully function if members do not
involve themselves in the routine
business operation.
Steps Used in registering cooperative
• Prepare general statement to help measure the cooperative’s chance of
success
• Draft cooperative’s by-laws
• Draft the articles of corporation
• Secure bond of accountable officer(s)
• Register with Cooperative Development Authority
Types of Business
according to activities
Service business
Focus on providing intangible products, such as offering
professional skills, proposals and expertise.
Schools
Medical Clinic
Accounting Firm banks
Hair salons and Spa
Repair shops
Law Firm
Advantage
No need for inventory
Skills can be improved and produce better service
Disadvantage
Services are harder to value
Less demand during economic downturns
Merchandising business
“buy and Sell”
Products are bought from manufacturers or other merchandisers
and are sold as is at a amount higher than the purchase price
Hardware
Drug stores
Sari-Sari store Cellphone Store
Jewelry Store
Supermarket
Advantages
Good merchandising attracts more customers.
It is flexible to changes
Disadvantages
Profits are highly dependents on prices set by merchandise supplies
Merchandise inventory maybe perishable
Manufacturing business
Materials are bought to create a new product.
Coca Cola
Gardenia factory
Car Manufacturer Sugar Cane Factory

Mill
Yakult factory
Garments Factory
Advantages
There is a continuous demand on manufacture goods
The creation of manufactures product leads to higher job satisfaction
Disadvantages
Because of the scope of activities manufacturing firms are often more labor
and capital intensive
The cost of the manufactures products highly depends on the price and
availability of the raw materials

Types of Business

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Types of Business

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What do you think is JM Photocopying Center’s type

of business according to ownership?

What do you think is JM Photocopying Center’s

• The proprietor and proprietorship business is considered as one taxpayer/

• Possibilities of conflicts or quarrels are minimized

Each partner is a general partner with unlimited liability.

With limited partner and atleast one general partner.

• Possibility of bigger resources than in single

b. Non-Stock Corporation- This is a corporation organized principally for

• Name of corporation • Name of board of directors

More source of funds Not easy to organize

Easy to transfer ownership More regulations to be followed

Liability of owner is limited Profit is taxed at the corporate tax rate

Unlimited commercial life Costly to incorporate

• Batas Pambansa Blg. 68, The corporation Code of the Philippines

• Members can become part of the cooperative by purchasing shares.

• Marketing cooperative • Financial service cooperative

Unlimited life. The change pf Obtaining capital through investors

Hair salons and Spa

Car Manufacturer Sugar Cane Factory

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