Owned, financed and run by private individuals or entities
Public Sector
Goods and services provided by the government or local authority
May be free or sometimes with a small fee
e.g. public hospitals, museums, etc.
Types of for-profit/commercial organizations
Sole trader
Business that is completely owned and controlled by just one person
Simplest form of business
Owned by a single person who assumes all profits and liabilities
Advantages
Little legal requirements for setup
All the income goes to one man
Less restrictions and easy decision-making
Disadvantages
All the income tax is shouldered by one man
Unlimited liability (owner is the same legal entity as the business) and all the debt incurred by the business is put on the owner
Partnership
Company ran by two or more individuals who form a partnership
Each person contributes money and resources, as well as sharing the responsibilities of managing a business.
Turns into a corporation if there >15 partners and will pay corporate tax.
Has a deed of partnership stating the responsibility of each partner
Involves presence of “silent” or “sleeping” partners, who do not make decisions, merely giving money to the business and earning profit
Advantages
Liability is spread around
Range of skills
Higher capital
Disadvantages
Unlimited liability despite being spread out between partners
Slower decision-making
Private limited company (LTD)
Shareholders are limited to family, friends, business partners
Shares cannot be sold to the public
Type of incorporation
Owner and company are separate entities
Results in limited liability
Registered at the Securities and Exchange Commision (SEC)
Advantages
Limited liability – when the company is sued or incurs losses, all a shareholder will lose is his stock in the business.
Higher capital, higher capacity for expansion
Disadvantages
More restrictions
Corporate taxes (higher)
Public limited company (PLC)
Company whose shares are listed on a stock exchange and can be freely bought and sold by anyone
Required by law to publish their complete and true financial position
Type of incorporation
Must conduct shareholders’ meetings
An LTD can convert to PLC by offering stock market flotation or an initial public offering (IPO)
Advantages
More capital raised from selling stock
Limited liability
Continuity after death, freely transferable
Higher capacity for expansion
Disadvantages
Possibility of a hostile take-over through shares, control can change unexpectedly and be lost by the original owner
Much more restrictions
Corporate tax
Types of for-profit social enterprises
Cooperatives
Organizations that are jointly owned and run by its members who share in profits and benefits
Advantages
Shareholders must be help run organization, work is more spread out
Equal voting rights/power among all shareholders
Disadvantages
Decision-making may be more time consuming or involve more conflicts
Less profit for each shareholder as it is spread among many members
Microfinance providers
Microfinance – loan service offered to individuals or groups with no access to more conventional banking services (unemployed, low-income individuals, etc.)
Public-Private Partnerships (PPP)
Public corporations are sold-off or transferred to the private sector
Advantages
Incentivized to be more efficient and productive
Government can focus on other projects and infrastructure
Enjoy the skills and talents of the private sector (can lead to increased efficiency and productivity)
Disadvantages
Services provided would be more expensive
Prices goes up, government has to subsidize (increase in taxes)
Aim of profit may lead to cost cutting, lower quality, higher prices
Types of non-profit social enterprises
Non-profit businesses
Run not for profit but to benefit the public (especially the marginalized)
Operational (objective or purpose) or advocacy (promote or defend a cause)
Non-profit organizations (NPOs) vs. non-government organizations (NGOs)
NPOs
Does not divide its funds between owners
Aim is to raise funds and use it for their beneficiaries
e.g. service organizations or charities, Bantay Bata, PGH, PCSO
NGOs
Exists in the private sector
NGOs participate in humanitarian projects, education projects, etc.
e.g. WWF, UNESCO, Red Cross
Charities
A non-profit organization that is exempt from taxes
Deploys its resources for charitable purposes
May raise funds to reduce poverty or to reduce environmental problems.
e.g. Caritas Manila, Pondo ng Pinoy
Pressure Groups
Organized groups that do not run for election
Advocate certain interests such as environment, sexuality, religion, rights, etc.
Seeks to manipulate the public or private sector for certain causes.
