Sole Proprietorship

 Meaning

 Features

 Advantages

 Limitations
Meaning

 It is a form of business organization in which an

individual invest his own capital, uses his own
skill and intelligence in the management of its
affairs and is solely responsible for the results of
its operations.
features
 Single ownership
 No separate legal entity
 Unlimited liability
 One man control and management
 Unlimited risk
 Undivided risk
advantages
 Easy and simple formation
 Flexibility in operations
 Prompt and quick decisions
 Business secrecy
 Independent control
 Minimum government regulations
limitations
 Limited financial resources
 Unlimited liability
 Limited managerial ability
 Uncertain life of business
 Limited scope for expansion
Partnership firm
 Meaning

 Features

 Advantages

 Limitations
meaning
Partnership is the relation between persons
who have agreed to share the profits of a business
carried on by all or ant one of them acting for all.
features
 Agreement
 Group of persons
 Existence of lawful business
 Sharing of profits and losses
 Unlimited liability
 No transferability of interest
 Utmost goodfaith
Advantages
 Easy formation
 Larger financial resources
 Effective management and control
 Flexibility of operations
 Diffusion of risks
 Better human and public relations
 Capacity for survival
 Business secrecy
Limitations
 Uncertainty of existence
 Unlimited liability
 Lack of harmony
 Risk of implied implied authority
 Lack of institutional confidence
Joint stock company
 Definition

 Features

 Kinds of companies

 Advantages

 Disadvantages
definition
 ACCORDING TO THE INDIAN COMPANIES ACT ,
1956,
“A company limited by shares having a
permanent paid up or nominal share capital of
fixed amount dividend into shares also of fixed
amount, held and transferrable as stock and
formed on the principles of having in its members
only the holders of those shares or stocks and no
other persons”
features
 Incorporated association
 Separate legal entity
 Artificial legal person
 Perceptual succession
 Limited liability
 Common seal
 Transferability of shares
 Separation of ownership and management
Kinds of companies
Classification on the basis of incorporation:
 Chartered companies
 Statutory companies
 Registered companies

Classification on the basis of numbers

 Private companies
 Public companies
 Classification on the basis of liability:
Companies limited by shares
Companies limited by guarantee
Unlimited companies

Classification on the basis of control

Holding companies
Subsidiary companies
 Classification on the basis of ownership:
 Government companies
 Non-government companies
advantages
 Limited liability
 Large financial resources
 Continuity
 Transferability of shares
 Benefits of large scale operation
 Democratic ownership
 Professional management
 Public confidence
 Diffused risk
 Social benefits
limitations
 Difficulty and costly formation
 Excessive government control
 Lack of motivation and personal touch
 Oligraphic management
 Delay in decisions
 Conflict of interests
 Frauds in promotion and management
 Lack of secrecy
 Speculation
 Social evils
Co-operatives
 Meaning

 Features

 Advantages

 Limitations
Meaning

An association of persons, usually of limited

means who have voluntarily joined together to
achieve a common economic aim through the
formation of a democratically controlled business
organization making equitable contributions to the
capital required and accepting the fair share of
risks and benefits of undertaking.
Features
 Voluntary association
 Universal membership
 Separate legal entity
 Democratic control
 Service motive
 Government control
advantages
 Easy to form
 Open membership
 Limited liability
 Economic management
 Democratic management
 Perceptual existence
 Social service
 Government patronage
 Social benefits
limitations
 Incompetent management
 Limited resources
 Absence of motivation
 Mutual rivalries
 Lack of secrecy
 Lack of interest
 Lack 0f business acumen
 Corruption
 Lack of mutual interest