BUSINESS ORGANISATIONS
owner does not need to wait for any other
Business organization is an enterprise formed
to making use of resources for creation of
utilities at certain charges for making gains. It
is otherwise known as business outfit,
business venture, business establishment,
business firm, business concern, business
undertaking, business enterprise, or business
entity.
Types of Business organizationns
1. Private business organizations: They are
those generally established, run and
managed by private individuals, and operate
in the private sector. Examples are sole
proprietorship, partnership, private
company, public company, co- operative
societies, and joint venture.
2. Public business organizations: They are
those generally established , run and
managed by the public authorities, and
operate in the public sector. Examples are
public corporation, public enterprise, public
utilities and nationalized industries.
A. Sole proprietorship: It is an unincorporated
enterprise established, owned, run, financed
and managed by a single person, making use
of resources to create utilities at certain
charges for making profit.It is otherwise
called a one- man business or sole trading.
Merits of sole proprietorship
1. It is simple to establish: Sole proprietorship
is simple and easy to establish because it
requires little amount of capital and legal
framework to set up the business.
2. It promotes promptness in decision
making: Sole proprietorship allows decision
making to be made quickly because the
investors before he or she could make
decisions.
3. It promotes privacy in financial records:
Sole proprietorship is not mandated to
publish its financial accounts publicly because
no other members of the public has financial
stake in the business, except the owner
investor.
4. It allows flexibility in operations: Sole
proprietorship does not have rigid openings
and closings time, which can be changed
without informing the members of the public.
Demerits of sole proprietorship
1. It faces unlimited liability: Sole
proprietorship faces unlimited liability
because it is unincorporated, which may
result to ruins of the owner.
2. It is subject to limited life- span: The
lifespan of sole proprietorship is limited
because if the owner dies, it will likely be the
end of the business.
3. It faces limited sources of finance: The
expansion of sole proprietorship is limited
because it faces limited sources of finance.
4. It faces limited business managerial skills:
The sole owner of the business makes use of
his or her own managerial skills alone
without any other complementary skills from
business partners, which may affect the rate
of innovation in the business.
B. Partnership: It is an unincorporated
enterprise established, owned, run and
financed by minimum of two and maximum
of twenty individuals, making use of
resources to create utilities at certain charges
for making profit. Examples are professional
partnerships, such as Audit