FORMS OF BUSINESS ORGANIZATION Coop 002 – Cooperative Management MARILYN P. GAOAT Instructor

Number of Persons Required for Formation Proprietorship Partnership Corporation Only one person At least two or more At least five persons (natural and juridical persons can be stockholders at the same time.

Grant of Juridical Personality Proprietorship Partnership Corporation No separate juridical personality from owner but business name should be registered with the DTI Mere agreement of partners can be a partnership. However, it is better if registered under the SEC Must be registered with SEC

Registration Requirements for Documentation Proprietorship Partnership Corporation Application Form Contract of Partnership Articles of Incorporation, By-laws and Bank Statement

Capitalization Contributions Proprietorship Partnership Corporation Only owner contributes capital Partners contribute cash or services Stockholders pay for amount of share he wants to buy

Management Structure Only one person decides Proprietorship Partnership Corporation Only one person decides Partners make a collective decision Board of Directors make final decision

Voting Rights No voting rights as it concerns only one person Proprietorship Partnership Corporation No voting rights as it concerns only one person Vote proportional to interest Vote proportional to interest; proxy voting allowed

Liability Unlimited to owner Proprietorship Partnership Corporation Unlimited to owner Unlimited as to partner except limited partnership Limited until authorized capital

Taxability Income tax of owner Partners pay tax on share as partners Proprietorship Partnership Corporation Income tax of owner Partners pay tax on share as partners Profits is taxable; stockholders pay tax on dividends received

Effect of Death of Owner, Partner, Stockholder or Member Proprietorship Partnership Corporation End of business operations unless heirs can take over the business Partnership automatically dissolves Corporation continues; heirs inherit shares