forms of organisation- roll no. 1

7/31/2019 Forms of Organisation- Roll No. 1

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FORMS OF

ORGANISATIONPRESENTED BY:-

ABHISHEK KUMAR RAI

M.B.A. 2nd semester

B.H.U.


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Form of Business Organization

The ultimate choice of the form of businessdepends upon the balancing of the advantagesand disadvantages of the various forms ofbusiness.

The right choice of the form of the business isvery crucial because it determines the power,control, risk and responsibility of theentrepreneur as well as the division of profitsand losses


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Forms of Business

Organisations

1.Sole Proprietorship

2.Partenership Firm

3.Co-operatives society4.Joint Hindu Family Business

5.Company


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1. Sole Proprietorship

Definition :-A business enterprise exclusivelyowned, managed and controlled by a single

person with all authority, responsibility and risk.


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Characteristics of a Sole Proprietorship

Almost no legal formalities

Single ownership

No share of profit or loss

Low capital

One-man control

Unlimited liability

The firm has no legal existence separate

from its owner


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Advantages & Disadvantages

Advantages

Easy to form and wind up

Direct Motivation

Quick Decision Better Control

Maintenance of Business

Secrets

Close Personal Relation Flexibility in Operations

Disadvantages

Limited Capital

Lack of Continuity

Limited Size Lack of Managerial

Expertise


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How to start a sole-proprietorship

A sole proprietorship require almost no legal

formalities. It can start the day you want it to start.

The only thing you must take care of is that you have

the licenses specific to your line of business. For exp.

If you are a doctor you need a license to practice etc. .

In case you wish to have a Trade Mark, design and

use it as your trade mark. One may even register a

Trade Mark with the proper authorities.

He maybe required to obtain a licence from the local

administration or from the health

department of the government, whenever necessary.


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2. Partnership FirmPartnership is defined as a relationbetween two or more persons who

have agreed to share the profits of abusiness carried on by all of them orany of them acting for all. The owners

of a partnership business areindividually known as the "partners"

and collectively as a "firm".


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CONTINUED.

partnership is formed by an agreement, which may be

either written or oral. When the written agreement is

duly stamped and registered, it is known as "Partnership

Deed". Ordinarily, the rights, duties and liabilities of

partners are laid down in the deed. But in the casewhere the deed does not specify the rights and

obligations, the provisions of the THE INDIAN

PARTNERSHIP ACT, 1932 will apply.
http://india.gov.in/outerwin.htm?id=http://indiacode.nic.in/rspaging.asp?tfnm=193209http://india.gov.in/outerwin.htm?id=http://indiacode.nic.in/rspaging.asp?tfnm=193209http://india.gov.in/outerwin.htm?id=http://indiacode.nic.in/rspaging.asp?tfnm=193209http://india.gov.in/outerwin.htm?id=http://indiacode.nic.in/rspaging.asp?tfnm=193209


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The deed, generally contains the following

particulars:-

Name of the firm.

Nature of the business to be carried out.

Names of the partners.

The town and the place where business will be carried

on. The amount of capital to be contributed by each partner.

Loans and advances by partners and the interestpayable on them.

The amount of drawings by each partner and the rate of

interest allowed thereon. Duties and powers of each partner.

Any other terms and conditions to run the business.


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Main features of Partnership firms

A partnership is easy to form as no cumbersome legalformalities are involved. Its registration is also notessential. However, if the firm is not registered, it will bedeprived of certain legal benefits. The Registrar of Firms

is responsible for registering partnership firms. The minimum number of partners must be two, while the

maximum number can be 10 in case of banking businessand 20 in all other types of business.

The firm has no separate legal existence of its own i.e.,

the firm and the partners are one and the same in theeyes of law.

In the absence of any agreement to the contrary, allpartners have a right to participate in the activities of the

business.


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CONTINUED.

Ownership of property usually carries with it the right of

management. Every partner, therefore, has a right toshare in the management of the business firm.

Liability of the partners is unlimited. Legally, the partnersare said to be jointly and severally liable for the liabilitiesof the firm. This means that if the assets and property of

the firm is insufficient to meet the debts of the firm, thecreditors can recover their loans from the personalproperty of the individual partners.

Restrictions are there on the transfer of interest i.e. noneof the partners can transfer his interest in the firm to any

person except to the existing partners) without theunanimous consent of all other partners.

The firm has a limited span of life i.e. legally, the firmmust be dissolved on the retirement, bankruptcy, ordeath of any partner.


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Advantages Ease of formation

Greater capital andcredit resources

Better judgement andmore managerialabilities

Flexibility inoperations

Sharing risks

Protection of interestof each partner

Disadvantages Unlimited liability

Lack of harmony

Limited capital No transferability ofshares


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Suitability for partnershipfirms

Partnership is an appropriate form ofownership for medium sized businessinvolving limited capital.

This may include small scale industries,wholesale and retail trade; small serviceconcerns like transport agencies, realestate brokers; professional firms likecharted accountants, doctors' clinic,attorney or law firms etc.


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How to form partnership deeds and start a

partnership firms

The general procedure for registering a partnership firmall over India is quite similar :

1. You have to prepare a partnership deed.

2. Fill in the required form at Registrar of firms office near

you.3. Submit the required form, the partnership deed and

other supporting documents to the Registrar of firms forapproval

NOTE:- This partnership deed must be made on stamp paper as per the law ofthe place of signing. The whole process of the drafting the partnership deedcan be done through a trusted lawyer. It should cast you around Rs. 1000 toprepare the deed.


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3. Co-operatives

A cooperative (also co-operative orco-op) is definedby the International Co-operative Alliance'sStatement on

the Co-operative Identity as an autonomous association

of persons united voluntarily to meet their common

economic, social, and cultural needs and aspirationsthrough a jointly-owned and democratically-controlled

enterprise .

A cooperative may also be defined as a business owned

and controlled by the people who use its services. The main principle underlying a cooperative organisation

is mutual help, i.e., each for one and all for each.
http://en.wikipedia.org/wiki/International_Co-operative_Alliancehttp://en.wikipedia.org/wiki/Statement_on_the_Co-operative_Identityhttp://en.wikipedia.org/wiki/Statement_on_the_Co-operative_Identityhttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Statement_on_the_Co-operative_Identityhttp://en.wikipedia.org/wiki/Statement_on_the_Co-operative_Identityhttp://en.wikipedia.org/wiki/Statement_on_the_Co-operative_Identityhttp://en.wikipedia.org/wiki/Statement_on_the_Co-operative_Identityhttp://en.wikipedia.org/wiki/International_Co-operative_Alliancehttp://en.wikipedia.org/wiki/International_Co-operative_Alliancehttp://en.wikipedia.org/wiki/International_Co-operative_Alliance


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Its main features

It is a voluntary organisation as a member is free to leave thesociety and withdraw his capital at any time, after giving a notice.

The minimum number of members is 10, but there is no limit to themaximum number of members. However, the members must be

residing or working in the same locality.

Registration of a co-operative enterprise is compulsory. A co-operative society may be registered with the Registrar of Co-operatives Societies.

After registration a co-operative enterprise becomes a bodycorporate independent of its members i.e. a separate legal entity

The capital of a cooperative society is raised from its members by

way of share capital. It can also obtain additional resources by wayof loans from the State and Central Cooperative Banks.


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CONTINUED.

It is subject to the provisions of the Co-operative Societies Act, 1912or State Co-operative Societies Acts. It has to submit annual reportsand accounts to the Registrar of Societies.

The liability of very member is limited to the extent of his capital

contribution.

The shares of co-operative society cannot be transferred but can bereturned to the society in case a member wants to withdraw hismembership.

Being a separate legal entity a co-operative enjoys continuity ofexistence which is not affected by death, insolvency, retirement, etc.of the members.
http://india.gov.in/outerwin.htm?id=http://indiacode.nic.in/rspaging.asp?tfnm=191202http://india.gov.in/outerwin.htm?id=http://indiacode.nic.in/rspaging.asp?tfnm=191202http://india.gov.in/outerwin.htm?id=http://indiacode.nic.in/rspaging.asp?tfnm=191202http://india.gov.in/outerwin.htm?id=http://indiacode.nic.in/rspaging.asp?tfnm=191202


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Differences between thePartnership and Co-operatives

A cooperative society has much in common with partnership. Yet

there are differences between the two types of organisation. In a

partnership mutual benefit is restricted to partners only, but in a

cooperative society it extends to its member as also the public. For

example, in a consumer cooperative store or a cooperative credit

society, the benefits are available to the members as well as thegeneral public.

partnership requires the existence of some business activity

whereas a cooperative may be formed whenever individuals have

common needs which are difficult to fulfill singlehanded.

registration is optional in the case of partnership but it is compulsory

for a cooperative society.


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Types of Cooperative Societies

(i) Consumers Cooperative Societies;

(ii) Producers Cooperative Societies;

(iii) Cooperative Marketing Societies;(iv) Cooperative Credit Societies;

(v) Cooperative Farming Societies;

(vi) Cooperative Housing Societies.


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Advantages

Greater amount of capital

Economical operations

Better conditions ofservice to employees

Continuity of existence

Limited liability

Open membership Government patronage

Disadvantages

Inability to collect

sufficient capital

Inability to provideefficient managerial

services

Rigid rules andregulations


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Joint Hindu Family Business

The joint Hindu family business refers to a businesswhich is owned by the members of a joint Hindu family. Itis also known as Hindu undivided family business.

The joint Hindu family form is a form of businessorganisation in which the family possesses some

inherited BUSINESS STUDIES property. The inheritanceof the property is among the male members. The shareof ancestral property is inherited by a member from hisfather, grandfather and great grandfather.

Thus, three successive generations can simultaneously

inherit the ancestral property. For purposes of running ajoint Hindu family business, only male members areentitled who are referred to as coparceners.

The oldest member is known as the Karta.

e mportant eatures o t e


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e mportant eatures o t ejoint

Hindu family business Membership by birth Management

Unlimited Liability No maximum limit

Minor members

Unaffected by death


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Merits & Limitation

Merits Continuity of

business

Family pride

Limitation Unlimited liability

Limited access tocapital

Karta too powerful


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THANK YOU

forms of organisation- roll no. 1

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