FORMS OF

BUSINESS
ORGANISATION

WHAT IS BUSINESS ORGANISATION

A business organisation is an establishment intended to

carry commercial business by producing goods or
services and meet the customers' needs. Its has five
forms •sole proprietorship,• partnership,•HUF,cooperative
society and joint stock company
 SOLE
PROPRIETORSHIP
Sole means single and proprietor means owner

A sole Proprietorship business is

owned managed and controlled by
the owner itself.he bear all the risk
and takes all the profit
N
THE ONE MA
ARMY
 FEATURES OF SOLE PROPRIETORSHIP

01 02 03 04 05
Formation and closure Unlimited liability No separate entity Complete control Lack of continuity
Easy formation and Owner is personally The proprietor and the The owner has all In sole
proprietorship the
closure as there is no
responsible for business are not the control over all business has lack of
legal boundaries considered as separate the business
payment of legal entity
continuity as the

debts in case of activities. business cant

continues after the
failure through as the owner is the
death of the owner
other assets only person as he is the only
involved in all person involved in
these activities business activities
 MERITS OF SOLE PROPRIETORSHIP

01 02 03 04
Secrecy Fast decision making Sence of accomplishment Direct incentive

The process of decision making is The Proprietor can

There is alot of secrecy faster than any other forms of perform the business The Proprietor takes all the
pressent as there is no activities as per his profits because the profit is
business organisation.
the reward for bearing the risk.
legale terms about willingness which creats
sharing the financial the sense of
accomplishment
statements
 LIMITATION OF SOLE PROPRIETORSHIP

01 02 03 04
Limited resources Unlimited liability Lack of managerial skills
Limited life of Business

It is challenging to Owner is personally As there is only one The business ends with
the death of the
raise vast amounts of responsible for person in the business proprietor
capital in a sole payment of who performs all the
proprietorship debts in case of
compared to a business activities
failure he has to sell
partnership or company
his personal assets
 JOINT HINDU
FAMILY BUSINESS
It is also known as "HUF" and governed by the hindu low
It is owned and run by family
members based on birth,with up to
three generations allowed to
participate.the eldest
member,known as the "karta",leads
the family business and all
members are co "parceners " with
equal ownership rights over the affi parivarik mahol
K
hai
ancestor's property
 FEATURES OF HINDU UNDIVIDED FAMILY

01 02 03 04
Formation Liability Control Minor members
For the formation of The "KARTA" control In HUF the new
joint hindu family The liability of and manges all the born baby of the
business,there should karta is unlimited business activities family also
be atleast two family whereas liability becomes the
members in the family
and ancestral property
of all other member by birth
to be inherited. Its is members is itself. There is no
governed by HINDU limited restrictions for a
SUCCESSION ACT minor to become
1956 a member of
business
 MERITS OF HINDU UNDIVIDED FAMILY

01 02 03 04
Effective cantrol Continue existence Liability Increase loyalty and corporations
The karta is the After the death Except "KARTA" all In HUF all the
absolute decision members have limited
maker which reduces
of the karta the liability member of
the chances of conflicts next eldest business are
between other members member will the family
and makes the decision
making process quick
become the new members so
and adaptable karta ensuring there is more
continuity loyalty and
corporation
 LIMITATIONS OF HINDU UNDIVIDED FAMILY
01 02
Lack of resources Unlimited liability of karta
Generally huf's have
less capital because the
The karta has
unlimited liability. in
huf mostly riles on the
case of failure of
inherited assets
repayment of debts
the karta have to sell
his personal assets
for the repayment
03 04
Limited managerial skills
Dominance of karta
The karta controls the business alone
which may upset the other members and The lack of
which can cause conflicts and may lead to managerial skills of
the breaking of family into parts
karta in all fields
may lead to unwise
dicision which
might cause the
downfall in
business
 PARTNERSHIP
FIRMS
Comes under Indian Partnership Act 1932
Partnership is "the relation
between persons who have
agreed to share profit of the
business carries on by all or any of
them
acting for all".
ra.
Ek tera,ek me
 FEATURES OF PARTNERSHIP

01 02 03 04
Formation liability Number of partners Risk bearing

Comes in te existence The minimum number of The partners shares the risks
The liability of all the members of
by legal agreement
partnership firm is unlimited. All
parts are two and as per the risk as well as the reward
between
of the partners are liable the "Rule 10 of
partner(partnership
individually and collectively to companies act 2014" the (profit) in the ratios specified
deed). And governed by
repay the debts maximum number of in the agreement
INDIAN
PARTNERSHIP ACT partners can be 50
1932
 FEATURES OF PARTNERSHIP
05 06
Decision making Continuity
All the crucial The partnership firm
decision are continues untill the
willingness of the partners.
taken with the
It can be continued even
consult of all the if one the partner dies if
partners the remaining partners
agrees to continue
07
Mutual agency relastionship
As all the partners are
entitled to participate in
business activities.
Partnership business can
be carried out by all the
partners or by any of
them acting on behalf of
other
 MERITS OF PARTNERSHIP

01 02 03 04 05
Easy to form Balanced decision making Larger financial resources Risk sharing Secrecy
It is very easy to form In partnership the All the partners The partnership
In sole proprietorship
as no legal formalities partners can divide the contribute some there is only one firms do not
are required to work according to their ammount of capital person who bear all the required to publish
completed. Even the skills and knowledge. The hence they more risk but in partnership there accounts
registration is not division of work leads to resources as compare to the risk is divided hence the affairs of
the sole proprietorship between the partners
compulsory specialisation and firm remains secret
efficiency in the
management
 DEMERITS OF PARTNERSHIP

01 02 03
Unlimited liability Limited resources
Conflicts
The liability of all the There is restrictions on The partners come from
partners is unlimited. In different backgrounds,
case of failure in
the number of partners
different families,
repayment of the debts hence contribution in therefore they may have
the creditors can claim terms of capital is not difference of opinion
over their personal sufficient for a large scale which may lead to
assets enterprise conflicts among the
partners
 DEMERITS OF PARTNERSHIP

04 05 06
Lack of continuity Lack of public confidence
Risk of mutual agency
The existence firm gets The public usually shows
affected by death, A dishonest partner may
insolvency or incapacity
less trust and faith as the enter into the contract
of any one partner as accounts of this firms are for personal benifits in
well as partners ca not published that case all the partners
demand dissolution of may have to suffer the los
the firm
 TYPES OF PARTNERS

01 02 03
ACTIVE PARTNER
Sleeping partner
Partner by estoppel
is an invested person a person who provides
who is involved in the some of the capital for a a person who gives an
daily operations of the impression to others that
partnership
business, but doesn't take he/she is a partner of the
an active part in managing firm through his/her own
the business. initiative, conduct or
behaviour.
 TYPES OF PARTNERS

04 05 06
Secret partner
Nominal partner
Partner by holding out

is a partner who is not is one who allows the use A person, who is not
known by the normal of his / her name by a actually a partner of a
public firm but does not firm but knowingly allows
himself/herself to be
contribute to its capita
represented as a partner
of the firm
TYPES OF PARTNERS
TYPES OF PARTNERSHIP
 TYPES OF PARTNERSHIP

01 02 03 04
Partnership at will Partnership for fixed time Particular partnership Limited liability partnership

A form of partnership
the partnership was created for a
If the partnership is is a type of general
that arises where the formed only to carry out
partnership has been
fixed duration of time. Hence
one business venture or
partnership where every
such a partnership will not be a
entered into for an
partnership at will, it will be a to complete one partner has a limited personal
undefined term. A
partnership at will may
partnership for a fixed term. After undertaking such a liability for the debts of the
the expiration of such a duration, partnership is known as partnership. Partners will not
be dissolved at any
time by a partner
the partnership shall also end a particular partnership.
After the completion of be liable for the tortious
serving notice on the
other partner(s). the said venture or damages of other partners but
activity, the partnership potentially for the contractual
will be dissolved
debts depending on the state.
PARTNERSHIP
DEED
partnership deed is a legal
document that serves as the
foundation of a partnership firm,
defining the terms of the
partnership agreement among its
members. This comprehensive
document outlines various aspects
of the partnership, including the
roles, responsibilities, rights, and
obligations of each partner
involved
Cooperative societies
[Cooperative society act 1912] working together and with others for a
Common purpose.
The cooperative society is a voluntary association of persons, who just
join together with the motive of welfare of the members
↓
They are basically joined to eliminate the
middleman for benefit of members
↓
At least 10 adult persons
↓
Capital through members
↓
Acquires a distinct legal identity
after its registration.
 FEATURES OF COOPERATIVE SOCIETY
voluntary entry
Any adult member who is
agree to join the firm by
his own willingness can
join by giving the notice
to the member of the
society
LIMITED LIABILITY
LEGAL ENTITY
The liability of members
The members of cooperative society
and the is limited to the extent
society are of amount contributed
seperate legal by them as capital
entities

cantorl Service motive

In cooperative society the The main motive
power to take decisions
of cooperative
lies in the hands of an
elected managing society is to
committee. The provide services
committee is elected by to its member not
the members
to earn profit
 MERITS OF COOPERATIVE SOCIETY

EQUAL VOTING STATUS Easy to form LIMITED LIABILITY

The cooperative society works on the
democratic system. They are based on the
principle of one person one vote .
Its verry easy and simple process.only ten
adult members having same intrest are
required to form it
The liability of members
of cooperative society is
limited to the extent of
amount contributed by
them as capital

Open membership
Support from government
Any person having
The cooperative societies get
same intrest can many benifits from the
become the member government as various
of a cooperative concessions and rebate in
society taxes
 DEMERITS OF COOPERATIVE SOCIETY

LIMITED CAPITAL INEFFICIENT MANAGEMENT LACK OF SECRECY

The cooperative societies are formed by
the people who have limited resources and
there is no compulsion to contribute some
minimum ammount of capital to become
partner hence these societies always face
shortage of capital
All the business activities here are
performed by the members and the
members are not the professional experts
hence the management in the cooperative
societies are inefficient
There are open discussions in
meeting about the business
operations hence its not
possible to maintain the
secreacy

Excessive government cantrol chances of conflicts

The Cooperative societies are
binded with all lots of rules and
regulations formed by government
and all this regulations restrict the
flexibility and efficiency of
cooperative organisation
The members of society are from
different backgrounds hences they
all have separate point of few on
the topics which often results in
conflicts
Types of Cooperative societies
TYPES OF COOPERATIVE SOCIETY

COOPERATIVE HOUSING SOCIETY

COPERATIVE CREDIT SOCIETY
•Construct houses at reasonable rates

• Giving easy credit on lower interest to

members •Members are people who want residential
accomodation at lower
•Eliminate lenders who charge high intrest cost
 JOINT STOCK COMPANY

Association of persons formed for carrying out business activities and

has a legal status independent of its members
governed by companies act, 2013.
The capital is divided into smaller parts called 'Shares' which is
easily transferable (in public limited)j
FEATURES OF JOINT STOCK COMPANY

artificial person control

Joint stock company is the Board of directors and top
seprate legal entity as per the level management controls
low and it is treated as artificial the business activities
person at.

perpetual succession
formation
The business will not stop with
Is very expensive and the exit aur entry of any person
complex process the business will run the way it
was running and it will end at
the time of wind up only
FEATURES OF JOINT STOCK COMPANY

limited liability risk bearing

All the members have
The risk is evenly
limited liability upto the
ammount of capital distributed among
contributed by them the share holders
 MERITS OF JOINT STOCK COMPANY
Limited liability
The liability of members is
limited upto the ammount
of capital contributed by
them
Professional management
This form of Organisation has the
professional management hences
there business grows faster dew to
their effectiveness and efficiency
of the management
Transfer of interest
The owners can sale the
business to whoever they
want in other forms of
business organisations it
is not possible
perpetual succession
The business will not stop with the
exit aur entry of any person the
business will run the way it was
running and it will end at the time
of wind up only
LIMITATION OF JOINT STOCK COMPANY

Complex process Delay in decision Massive regulations

All lots of rules and
making regulations to be followed
The process of formation is
The decision making by the firms as they are
verry complex and expensive
process is so slow as binded with a lots laws
the firm has a complex
structure
Lack of secrecy No personal touch
Its compulsory for every private
company to publish thir accounts As the owner management
every year hence there is no are diffrent persons hence
secrecy in the business operations
there is no personal touch
between the employees and
the owner
THANK
YOU