Managing Entrepreneurial Venture

Choosing a Form of Business

Ownership
 Types of Business Ownership
• Sole Proprietorship
• Partnership
• Corporation
– PVT Ltd

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 Sole Proprietorships
• A business that is owned (and usually
operated) by one person
• The simplest form of business ownership and
the easiest to start
• The most widespread form of business
ownership

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rights reserved.
 Advantages and Disadvantages of
Sole Proprietorships
ADVANTAGES DISADVANTAGES
– Ease of start-up (and shut – Lack of continuity
down) – Lack of money
– Pride of ownership – Limited management skills
– Retention of profits – Difficulty in hiring employees
– Flexibility

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 Partnerships
• A voluntary association of two or
more persons to act as co-owners of
business for profit
• Less common form of ownership
than sole proprietorship or
corporation
• No legal limit on the maximum
number of partners; most have only
2
• Large accounting, law, and
advertising partnerships
have multiple
partners

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 Types of Partners
• General partner
– A person who assumes full or shared responsibility for
operating a business

• Limited partner
– A person who contributes capital to a business but has no
management responsibility or liability for losses beyond
the amount he or she invested in the partnership

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The Partnership Agreement
• Articles of partnership
– An agreement listing and explaining the terms
of the partnership
– Agreement should state
• Who will make final
decisions
• What each partner’s duties
will be
• How much each partner will invest
• How much profit or loss each partner receives
or is responsible for
• How the partnership can be dissolved

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rights reserved.
Advantages and Disadvantages of Partnerships

ADVANTAGES DISADVANTAGES
– Ease of start-up – Lack of continuity
– Availability of capital and – Management
credit disagreements
– Personal interest – Lack of continuity
– Combined business skills – Frozen investment
and knowledge
– Retention of profits

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Advantages and Disadvantages of PVT
ADVANTAGES DISADVANTAGES
– Private limited companies are – Paper Work
separate legal entities from – Management disagreements
their owners, which provides
personal liability protection for
– Less privacy due to the
any potential legal suits brought publicly available company
against the company details
– It could be easier to obtain – There are increased costs to
financing from banks with a hire an accountant for a
private limited company limited company as opposed
to an LLC
– Can Issue Shares
– Additional tax benefits

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rights reserved.