The Nature and Forms of Commercial Organization

2883 WordsApr 3, 201312 Pages
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…show more content…
Oral agreement tends to have more problems than written partnership agreements. The written agreement should cover at least the following points: 1. Management. Who is responsible for which management decisions and how will they be made? 2. Property ownership and Contribution. It is the list the property each partner will contribute to the partnership and describe how it will be owned. Property may be owned by a partnership, or the partners may retain ownership of their individual property and rent it to the partnership. When the partnership itself owns property, any partner may sell or dispose of any asset without the consent and permission of the other partners. 3. Share of Profits and Losses. The method for calculating profits and losses and the share going to each partner should be carefully describe, particularly if there is an unequal division. Profits are generally divided in proportion to the value of the assets, labor and management contributed to the business. 4. Records. Records are important for the division of profits and for maintaining an inventory of assets and their ownership. 5. Taxation. The agreement should contain a detailed account of the tax basis of property owned and controlled by the partnership and copies of the partnership information tax returns. 6. Termination. The agreement should contain the date the partnership will be terminated if one is known or can
Open Document