Forms of Business Organizations

• Sole Proprietorship


  The simplest form of business organization where only one (1) individual owns the business. It is easy to setup and is the least costly among all forms of ownership.
• Partnership


  Formed by two (2) or more individuals to carry on as business owners. Article 1767 of the New Civil Code of the Philippines defined partnership as 'contracts whereby two (2) or more persons bind themselves to contribute money, property or industry to a common fund to divide the profits among themselves'.
• General Partnership


  • Each partner has unlimited liability for the debts incurred by the business. Usually manage the firm and may enter into contractual obligations on the firm's behalf. Profits and asset ownership may be divided in any way agreed upon by the partners.
• Limited Partnership


  • Contains one (1) or more general partners and one (1) or more limited partners. The personal liability of a general partner for the firm's debt is unlimited, while the personal liability of limited partners is limited to their investment. Limited partners cannot be active in management.
• Corporation


  A separate body consisting of at least five (5) to 15 individuals treated by law as a unit. According to Section 2 of the Corporation Code of the Philippines, a corporation is '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'.