FORMS OF BUSINESS ORGANIZATION

FORMS OF BUSINESS ORGANIZATION

1. SOLE PROPRIETORSHIP 

2. PARTNERSHIP 

3. HINDU UNDIVIDED FAMILY 

4. COMPANY 

5. COOPERATIVE SOCIETY 

6. LIMITED LIABILITY PARTNERSHIP 

7. ONE PERSON COMPANY

SOLE PROPRIETORSHIP 

It refers to a form of business organization which is owned, managed & controlled by an  individual who is the recipient of all profits and bearer of all the risks. The word sole implies  only and proprietor refers to owner, hence a sole proprietor is the one who is the only  owner of the business organization. Formation and closure is very easy in this form of  business organization. All the profit belongs to the single owner and every kind of risks  belong to him only. And he has unlimited liability which means that if there is loss then only  he has to repay the losses from his personal assets. He has complete control on the  business. This form of business has no separate identity. 

PARTNERSHIP 

A partnership is a kind of business where a formal agreement between two or more people  is made who agree to be the co-owners, distribute responsibilities for running an  organization and shares the income or losses that the business generates. Formation and  closure is very easy in this type of business organization. It totally depends on trust of  partners. Every type of risks distribute between partners and they have unlimited liability  which means that if business faces any loss then both partners have to repay the debts  from their personal assets. Better decision made in this type of business organization  because of different opinions and best opinion or decision took place. There is continuity in  business because if one partner is not able to work then another partner continue the work. There is more financial investment in this type of business organization.

HINDU UNDIVIDED FAMILY 

It is one of the oldest forms of business organization, it refers to a form of organization  wherein the business is carried on by the business of Hindu undivided family it is governed  by Hindu law. The basis of membership in the business is birth in a particular family. The  business is controlled by the head of the family, i.e. eldest member known as KARTA, all other  members have equal ownership right over the property of an ancestor and are known as co parceners. The Karta has full control over the business activities and takes a decision  quickly, no one can interfere in the decision of Karta as every member is bound to accept his  decision. Co-parceners have limited liability but the Karta has unlimited liabilities. 

COMPANY 

The company is a form of organization which is governed by companies Act 1956, A company  is an association of persons formed for carrying out business activities and has a legal  status independent of its members thus it is an artificial person having separate legal  existence, perpetual succession and a common seal. And the liability of the shareholders in  the company is limited. And funds invested in this type of business organization are too  much. Decision making process is very slow but better decisions taken in this type of  organization. Formation of is a company is a complex process. There is too much scope of  expansion.

COOPERATIVE SOCIETY 

Here the word cooperative means working together with each other for a common purpose.  The cooperative society is a voluntary association of persons, who join together with the  motive of welfare of the members. They are driven by the need to protect their economic  interests in the face of possible exploitation at the hand of middle men obsessed with the  desire to earn greater profits. Cooperative societies are formed with the aim of helping  their members. This type of business organization is formed mainly by weaker sections of  the society in order to prevent any type of exploitation from the economically stronger  sections of the society. Cooperative societies need to be registered under the Cooperative  Societies Act, 1912 in order to function as a legal entity. Members of the society raise the  capital within themselves. The membership of a cooperative society is open to all i.e.,  membership is open to all, irrespective of their caste, creed and religion. The members of a  cooperative society will have limited liability. The liability is limited to the amount of capital  contributed by the member. 

LIMITED LIABILITY PARTNERSHIP 

It is an alternative corporate business form that provides the benefits of limited liability of a  company along with the flexibility of a partnership. An LLP is a legal entity and is liable to the  full extent of its assets but the liability of a partner is limited to their contribution in the LLP. In LLP, one partner will not be liable for the wrongdoing of another partner. The partner will  be held responsible only for his own actions. LLP is called a hybrid between company and  partnership as it incorporates properties of both the organization structures. It is same as  Partnership with no limitation which partnership has, so in that case this became the best  business organization according to my opinion.

ONE PERSON COMPANY

“One person company” means a company which has only one person as member. Any  natural person (should not be minor) who is an Indian citizen whether a resident in India or  not i.e. NRI shall be eligible to incorporate a One Person Company and appoint nominee of an  OPC. One person company is corporatization of sole proprietorship, so it has all benefits will  a corporate enjoys aside to this it has some relaxations in provision of company law which  are It has separate legal entity. The liability of shareholder/ director is limited. The director  and shareholder can be same person in this type of business organization. It has all the  benefits which a sole proprietorship has but no limitation which they have they do not have  unlimited liability and because of that we can also say it as limited liability company.

THANK YOU!