Forms of business organisation

to know about what is business and its forms of business organisation

1. PRESENTED BY G. ESWARI FORMS OF BUSINESS ORGANISATION

2. INTRODUCTION : If one is planning to start a business or is interested in expanding an existing one, an important decision relates to the choice of the form of organisation . Various forms of business organisations from which one can choose the right one include: Sole proprietorship Joint Hindu Family business Partnership Cooperative societies Joint stock company

3. Sole proprietorship : S ole proprietorship is a popular form of business organisation and the most suitable form for businesses ,especially in their initial years of operation. sole proprietorship refers to a form of business organisation which is owned ,managed and controlled by an individual who is the recipient of all profits and bearer of all risks.

4. FEATURES OF SOLE PROPRIETORSHIP Formation and closure Sole risk bearer and profit recipient Control No separate entity Lack of business continuity

5. MERITS : Sole proprietorship offers many advantages. Some of the important ones are as follow : Quick decision making . 2. Confidentiality of information. 3.Direct incentive. 4. Sense of accomplishment . 5.Ease of formation and closure.

6. 2. Joint Hindu Family Business : It refers to a form of organisation where in the business is owned and carried on by the members of the HUF . It is governed by the Hindu Law. FEATURES : Formation Liability Control Continuity Minor member

7. MERITS : The advantages of the joint Hindu Family Business are as follows: Effective control Continued business existence Limited liability of members Increased loyalty and cooperation

8. 3.Partnership: The Indian Partnership Act, 1932 define partnership as “the relation between persons who have agreed to share the profit of the business carried on by all or any one of them acting for all.” FEATURES : 1.Formation 2. Liability 3.Risk bearing 4. Continuity 5. Number of partner

9. MERITS : The following points describe the advantages of a partnership firm. 1.Ease of formation and closure 2. Balanced decision making 3. More funds 4. Sharing of risks 5. Secrecy

10. 4.Cooperative society The cooperative society is a voluntary association of persons, who join together with the motive of welfare of the members. FEATURES Voluntary membership Legal status Limited liability Control Service motive

11. MERITS : Some of the advantages of the cooperation form of organisation are as follows. Equality in voting status 2. Limited liability 3. Stable existence 4. Economy in operations 5.Support from government

12. 5. Joint stock company : a company is an association of person formed for carrying out business activity and has a legal status independent of its members. FEATURES Artificial person 2. Separate legal entity 3. Formation 4. Perpetual succession 5. Control

13. MERITS : The company form of organisation offers a multitude of advantages . Limited liability 2. Transfer of interest 3. Perpetual existence 4. Scope for expansion 5. Professional management

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