TABLE OF CONTENTS

 INTRODUCTION ………………………………………………..04
 SOLE PROPRIETORSHIP……………………………………….04-05
 PARTNERSHIP…………………………………………………..05-07
 HINDU JOINT FAMILY …………………………………………07-10
 CO-OPERATIVE SOCIETY ……………………………………..10-12
 JOINT STOCK COMPANY….,…………………………………..12-14
 CONCLUSION………………………………………………….…14
 BIBLIOGRAPHY……………………………………………….….15

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INTRODUCTION

A business organisation is an entity that was formed to carry out activities to achieve vision and missions.
This form of business is governed by legal systems such as the Property Act, Contract Act, Incorporation
Rules, and National Insurance Act, among others.

The three most prevalent types of business enterprises are sole partnerships, proprietorships, and limited
liability companies (or corporations). In the first type, a single person owns and supervises the entire
operation on a day-to-day basis. The great majority of businesses are in this situation. In the case of an LLP,
which includes huge legal or accounting companies, advertising agencies, and brokerage houses, the
partnership can include 2 – 20 or more members. This sort of business is owned by the partners, and they
may earn different portions of the profits depending on their investment or participation. The firm must be
reconstructed as a new partnership when a partner leaves or a new partner enters. The limited-liability
corporation, or company, is the third category, and it refers to incorporated groupings of people—that is, a
group of individuals treated as a legal entity with powers, property, and obligations separate from those of
its members. This type of business is also legally distinct from its employees, whether they are employees,
shareholders, or both; it can form legal relationships with them, execute contracts with them, and sue and be
sued by them.

FORMS OF BUSINESS ORGANIZATION

There are many forms in the business world, but the most common forms of business organisation
are.

SOLE PROPRIETORSHIP

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In this type of organization, there is the only person who is the sole owner and recipient of all profits and
losses earned by the organization and also the bearer of all risks. Here, there are no separate laws to govern
sole proprietorship, and the owner is liable for all of their actions. The owner is also solely responsible for
the ownership and also for running the business. In this type of organisation, the owner doesn't have to
consult anyone before making their decision. They are able to keep their business ideas a secret and maintain
overall secrecy.

FEATURES OF SOLE PROPRIETORSHIP:

1. Formation and closure: It can be established and closed without any legal formalities.

2. Liability: The liability of the sole proprietor is unlimited in this form of business organisation.

3. Sole risk bearer and profit recipient: Being a sole owner, he bears all the risk and receives all the
profits.

4. Control: All the decisions are taken and implemented in the organization by the owner.

5. No separate entity: Both owner and business are considered as one in the eyes of law.

6. Lack of business continuity: Business can be continued till the owner wishes to.

MERITS OF SOLE PROPRIETORSHIP:

1. Quick decision making: Prompt decision making as all the decisions are to be taken by the owner.

2. Confidentiality of information: Being a sole owner, it is easy to maintain business secrecy.

3. Direct incentive: All the profits are enjoyed by the owner as there is no one to share profits.

4. Sense of accomplishment: Successful business provides satisfaction to the owner and sense of
achievement.

5. Ease of formation and closure: No legal formalities for formation and closure of business which
makes it easy to start and end the business.

LIMITATIONS
1. Limited resources: Business can be funded from savings of the owner or money borrowed from
friends, relatives.

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 2. Limited life of a business concern: Continuity of the business depends on the health and state of
mind of the owner.

3. Unlimited liability: In case business fails repayment of debts, his personal assets are at risk.

4. Limited managerial ability: One person may not possess the ability to manage all the functions.

PARTNERSHIP FIRM

This implies the relationship between partners that have agreed to share the profits of the business and its
losses. This was governed by the Indian Partnership Act of 1932. Here the partners of the firm have
unlimited liability and are liable for all the decisions taken. The Partners share the profits in a ratio agreed
upon beforehand. Lack of continuity or death can bring this Partnership to an end. Partners can oversee the
various functions according to their expertise. The capital is contributed by all the partners.

FEATURES
1. Formation: Business is established as per the provisions of partnership Act 1932.

2. Liability: All the partners in the business have unlimited liability.

3. Risk bearing: All the risk in the business is shared by all the partners.

4. Decision making and control: All the decisions are taken in after the consent of all the partners and
each partner shares responsibility of running business.

5. Continuity: Continuity depends upon the partnership deed among the partners at the time of its
formation.

6. Number of partners: Minimum 2 and maximum 50 members [as per the Companies
(miscellaneous) Rules 2014}, or maximum could be 100 ( according to Companies Act, 2013).

7. Mutual agency: Each partner is the owner as well as the agent of the firm and agent to other
partners.

MERITS
1. Ease of formation and closure: Business can be established and closed with the consent of all the
partners as the registration is optional.

2. Balanced decision making: All the decisions are taken by consent partners as partners undertake
responsibilities as per their expertise.

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 3. More funds: Funds are provided by all the partners, which increases the scope for large-scale
business operation.

4. Sharing of risks: Business risk and responsibilities are shared among all the partners.

5. Secrecy: It is easy to maintain business secrecy as there is no need to submit financial results.

LIMITATIONS

1. Unlimited liability: Each partner’s liability is extended to their personal property.

2. Limited resources: Availability of Finance is limited due to the restriction of number of partners.

3. Possibility of conflicts: All the partners may have different opinions which create conflict among
them.

4. Lack of continuity: Any conflict between partners or death of a partner may bring business to an
end.

5. Lack of public confidence: It is difficult for an outsider to ascertain true financial position as there
is a lack of availability of financial reports.

TYPES OF PARTNERS

1. Active partner: A partner who contributes capital, shares profits and losses, participates in
management and has unlimited liability.

2. Sleeping or dormant partner: Partner who contributes capital, shares profits and losses and has
unlimited liability but does not participate in management.

3. Secret partner: This partner participates in management operations secretly, but does contribute in
profits and losses.

4. Nominal partner: Partner who does not contribute capital and does not share profit and losses but
allows partnership business to project him or her as partner.

5. Partner by estoppel: An individual who is not a partner but projects himself/herself as a partner to
an outsider and has unlimited liability.

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 6. Partner by holding out: An individual who is not a partner but is projected as a partner by other
partners of the partnership firm and his liability is unlimited.

JOINT HINDU FAMILY BUSINESS

Hindu Undivided Family business is a precise kind of business structure found only in India. This is one of
the classical methods of business structure in the nation. It is administered by the Hindu Law. The source of
membership in the company is birth in a family and 3 consecutive generations can be members of the
company.

The business is managed by the head of the family (eldest member) and he is called Karta. However, all the
members hold equal ownership over the property of an ancestor and they are called as co-parceners.

MEANING OF JOINT HINDU FAMILY BUSINESS

 It refers to a form of business organization which is owned and carried on jointly by the members of
the Hindu Undivided Family (HUF).

 It is also known as Hindu Undivided Family Business.

CHARACTERISTICS Of JOINT HINDU FAMILY BUSINESS:

Formation

 There should be at least two male members in the family to form a HUF.

 Ancestral property should have been inherited by members of HUF.

 All of the members enjoy this property and have an equal share in that property.

 Thus, any child taking birth in that family becomes a member of the HUF.

 There is no requirement for an agreement to become a member.

Liability

 There is limited liability of all the members or co-parceners in the Hindu Undivided Family business.

 All the co-parceners have equal rights and shares in the property of Hindu Undivided Family
business

 The Karta has unlimited liability.

Control

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  Karta is the person who has full control over the Hindu Undivided Family business.

 Karta can take advice from all the members but he is not bound to accept their decisions.

Continuity

 After the “Karta” is deceased, the very next eldest member takes up the position of Karta in Hindu
Undivided Family business.

 The business can be divided and ended up by the mutual consent of the members.

Minor Members

 The person who has taken birth in Hindu Undivided Family can be a member of the family business.

 Therefore, a minor can also be a member of the family.

This form of business organization is found only in India. All the members of Hindu Undivided Family
manage and control the business with the direction of the head of the family. Governing law of this business
is Hindu Law. Karta, who is the eldest member of the family, is the head of HUF (Hindu Undivided Family).

MERITS AND DEMERITS OF THE HINDU UNDIVIDED FAMILY

The merits of the joint Hindu family business are as follows:

(1) Effective Control

 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.

 Hence, it avoids clashes among the members and results in very speedy decision making.

(2) Continued Business Existence

 After the death of Karta, the next eldest member takes up his position. So, it does not affect the
activities of the business.

 Hence, all the business activities are done smoothly, continuously without any threat.

(3) Limited Liability of Members

 As all the liability of the members is restricted to the extent of their share in the business.

 But the Karta has unlimited liability due to his complete hold on the business.

 Hence, in case of dissolution of the business, Karta’s personal assets and his share will be liable.

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(4) Expanded Loyalty and Cooperation

 All the business operations are carried on by the members of a family jointly.

 So, this increases loyalty and cooperation with each other without any hindrance.

 Therefore, all the targets of the business can be achieved by the cooperation among the members and
the Karta.

LIMITATIONS OF JOINT HINDU FAMILY BUSINESS

Below-mentioned are the few demerits of a joint Hindu family business:

(1)Limited Resources

 All the members of Joint Hindu Family Business totally depend upon the ancestral property due to
their limited liability.

 Many commercial banks resist extending the credit limit due to the weak financial position of the
business.

 Hence, this will result in limited expansion and growth of the business.

(2)Unlimited Liability of Karta

 All the important decision regarding management of various business activities are taken by Karta.

 But there is a disadvantage with the Karta that he has unlimited liability.

 Hence, all the business debts are paid by using the personal assets of the Karta.

(3)Dominance of Karta

 The Karta takes all the decisions individually and manages the business

 He also involves other members in decision making.

 But Karta is not bound to accept the decisions of the members which may create conflicts between
the Karta and the other members.

 Hence, due to clashes in decision making, lack of cooperation between Karta and other members
occurs.

(4)Limited Managerial Skills

 Sometimes the members suffer due to unfair decisions taken by the Karta in respect of business
operations.

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  Unfair decisions are taken due to the lack of managerial skills.

 So, the Karta cannot be knowledgeable or proficient in all managerial functions.

 Nowadays, the joint Hindu family business is declining due to the decreasing number of joint
Hindu families in the nation.

CO-OPERATIVE SOCIETY

This is a voluntary association of people to overlook the welfare of the members. This type of organization
oversees the economic interests of the members and to avoid the exploitation by the middleman. This
society can enter into contracts; they can sue and be sued. The liability of the members of the society is
limited to how much they contribute to the capital. The principle of one man one vote exits as each member
has equal voting rights.

FEATURES OF CO-OPERATIVE SOCIETY

1. Voluntary membership: Any individual irrespective of caste, gender, religion with common
interest is free to join or leave a cooperative society as and when he/she desires.
2. Legal status: Cooperative society has separate identity status distinct from its members, and the
registration of such society is also mandatory.
3. Limited liability: Members have liability limited to their capital contribution.
4. Control: All the decision making power is in the hands of an elected managing committee which are
chosen by members with one man one vote concept.
5. Service motive: Society is formed with the motive of providing mutual help to team members.

MERITS OF CO-OPERATIVE SOCIETIES:

1. Equality in voting status: Each member has equal right to vote and elect members of the managing
committee.
2. Limited liability: The liability of members is limited to their capital contribution.
3. Stable existence: Cooperative societies keep on going irrespective of situations of death, bankruptcy
or insanity of its members.
4. Economy in operations: The members of the society work voluntarily which helps in reducing
costs.
5. Support from government: Government provides support to societies in the form of lower taxes,
interest rates and subsidies.
6. Ease of formation: No legal formalities are involved in formation of societies.

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LIMITATIONS OF CO-OPERATIVE SOCIETY
1. Limited resources: Capital contribution by the member is the only source of finance, and low
dividend also discourages members for the provision of finance to the society.
2. Inefficiency in management: Members working on voluntary basis may lack necessary expertise
and skills, leading to inefficiency in operations and management.
3. Lack of secrecy: Difficult to maintain secrecy as members disclose all information related to work
of the society in the meeting.
4. Government control: Societies need to follow rules and regulations as stated by the government and
submit audited financial reports of the society. However, such government intervention affects the
freedom of work for such societies.
5. Differences of opinion: Difference of opinion as a result of individual interest over the welfare may
lead to conflicts amongst members.

TYPES OF COOPERATIVE SOCIETIES

1. Consumer’s cooperative societies: Societies formed for providing good quality services and
products at a reasonable rate, to protect the interest of consumers.
2. Producer’s cooperative societies: Societies formed for providing good quality and low priced raw
materials and other inputs, to protect the interest of producers.
3. Marketing cooperative societies: Societies for providing services related to marketing of products
by small producers.
4. Farmer’s cooperative societies: Societies formed for providing farmers with better inputs at
reasonable rates to improve productivity.
5. Credit cooperative societies: Societies established to provide financial assistance to its members
at very reasonable terms.
6. Cooperative housing societies: Societies formed for constructing houses for its members at
reasonable cost.

JOINT STOCK COMPANY

The Companies Act, 2013 defines, "A company as an artificial person having a separate legal entity,
perpetual succession and a common seal."

FEATURES OF A JOINT STOCK COMPANY

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 1. Artificial person: A company is created by law and has legal status but it does not function like
human beings. All business activities are done by the board of directors in the name of the company.

2. Separate legal entity: A company has its own identity distinct from its owner with the
incorporation of a company.

3. Formation: Company is formed by fulfilling all the legal formalities as stated under Companies Act,
2013.

4. Perpetual succession: A company is created by law and can be wound up by law only. Existence
of the company is not affected by the status of members.

5. Control: Business affairs of a company are managed and controlled by the Board of Directors.

6. Liability: A company has limited liability i.e., liability only to the extent of the capital contribution.

7. Common seal: As a company is an artificial legal person, it cannot have a sign on its own/ Hence
common seal acts as the official signature for a company. All the official documents must have a
common seal for legal binding.

8. Risk bearing: The risk of loss is shared by all the shareholders in proportion to their investment in
the company.

MERITS OF JOINT STOCK COMPANY

1. Limited liability: Shareholders liability is limited to the investment in the company, thus, there is no
risk of losing personal assets.

2. Transfer of interest: Shares can easily be sold in the market or can be converted into cash.

3. Perpetual existence: Company's existence is not affected by the status of shareholders,

company continues to exist.

4. Scope for expansion: Companies can raise large amounts of funds from the public as well as
borrowings from financial institutions or banks.

5. Professional management: large-scale operation requires management by professionals and

specialised individuals.

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LIMITATIONS OF JOINT STOCK COMPANY

1. Complexity in formation: Formation of a company requires fulfilling of documentation and legal

formalities which makes the procedure lengthy and complex.

2. Lack of secrecy: All financial information is disclosed to the general public that there is no
confidentiality or secrecy.

3. Impersonal work environment: Business affairs are managed by professionals not owners, thus,
it lacks personal contact with employees and customers.

4. Numerous regulations: A company involves various rules and regulations which reduces freedom
to work and involves a lot of money, time and effort.

5. Delay in decision making: Decision making needs to follow a set of hierarchy which may cause
delay in taking decisions and actions.

6. Oligarchic management: Shareholders have very little control over the running of business, thus,
the directors take all the decisions which may at times get influenced by their personal interest.

7. Conflict in interests: It is difficult for management to satisfy everyone as there are too many
stakeholders with diverse interests.

CONCLUSION

The term business organisation refers to how businesses are structured and how that structure aids them in
meeting their objectives. In general, businesses are created with the goal of either making a profit or
improving society. A for-profit organisation is solely concerned with making a profit. When an organisation
focuses on enhancing the social good through the arts, youth development, health care, or another area, it is
referred to as a nonprofit (or not-for-profit) organisation and is not usually referred to as a business.

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BIBLIOGRAPHY

Article referred

 Companies of India with focus on health, education and environment”, African Journal of Basic &
Applied Sciences 4(3): pp. 95-105.
 Bhupender and Vikas Kumar Joshiya (2012) “Issues and Challenges of Corporate social
responsibility in India”, IJIBF, Vol.2, N. 2, July-Dec.2012, pp. 169-182.
 Dhond Arvind (2008), Assistant Professor (Selection Grade), St. Xavier’s College Mumbai -
Corporate Social Responsibility Of Indian Business Houses.
 Dr. Arvind Jain (2012) “Corporate Social Responsibility: An Explorative Review”, Journal of
Accounting and Finance, Vol.26, N.1, October 2011- March 2012, pp. 13-19

Web resources

 www.legalservicesindia.com
 www.hanumant.com
 www.lawyersclubindia.com
 www.comvakilno1.com/laws-indian-bareacts
 www.wikkipedia.com
 www.ipleader.lawofcrimes.com

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