BCOC-132 BUSINESS ORGANISATION AND MANAGEMENT CHAPTER-5 FORMS PF BUSINESS ORGANISATION-1

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BCOC-132 BUSINESS ORGANISATION AND MANAGEMENT CHAPTER-5 FORMS PF BUSINESS ORGANISATION-1

SOLE TRADE ORGANISATION

A sole trader also known as a sole proprietorship, is a type of business organization where an individual operates and owns the entire business. In this structure, there is no legal distinction between the owner and the business entity itself , the owner has full control over decision making and is personally responsible for the business’s debts and obligations, this form of organization is common for small business and individual entrepreneurs due to simplicity and ease of setup.
Main feature:-

1. One man ownership
2. No separation of ownership and management 3. No separate entity
4. All proBit to proprietor
5. Individual risk
6. Less legal formalities
7. Unlimited liability

Merits :-
• Easy formation
• Direct motivation
• Full control
• Quick decision
• Flexibility in operation • Secrecy
• Personal touch
• Dissolution easy

Limitation:-
• Limited resources
• Limited managerial capacity
• Not suitable for large scale organization • Unlimited liability
• Less stability
• No control
• Less scope for economies of scale

PARTNERSHIP OF ORGANIZATION

A partnership is a type of business where two or more people work together to run a company and share its proBit and losses, in a partnership each person involved called partner , these partners contribute money, skill, or property to the business
MAIN FEATURES

1. Plurality of persons
2. Contractual relationship
3. ProBit sharing
4. Existence of business
5. Principal- agent relationship 6. Unlimited liability

CLASSIFICATIONS OF PARTNERS
1. BASED ON THE EXTENT OF PARTICIPATION

• Active partner(working partner)
• Sleeping partner :-if the partner is not actively associated with the

working of the partnership Birm

2. BASED ON THE PROFIT SHARING

  • NOMINAL PARTNER:- is someone who is officially recognized as a partner in partnership but has invested little or no capital and is not actively involved in day -to day operations or management of the business, they may have nominal or symbolic role ,often for legal or formal purposes without significant contribution to the business

  • Partner in pro0it:- a partner who share the proBit of the business without being liable for losses

    3. BASED ON THE BEHAVIOUR AND CONDUCT EXHIBITED:-

    • PARTNER BY ESTOPPEL:- a person who behave in the public in a such a

      fashion as to give an impression that he is one of the partners in

      partnership firm

    • PARTNER BY HOLDING OUT:-when an individual represent themselves

      either intentionally or unintentionally as partner in a business 4. BASED ON LIABILITIES:-

      • LIMITED PARTNER:- the liability of such partner limited to the extant of capital contributed by him

      • GENERAL PARTNER(UNLIMITED PARTNER):- his liability is unlimited he is entitled to participate in the management of the business

      PARTNERSHIP DEED

      A partnership deed is a legal document that outlines the term and conditions agreed upon individuals entering into a partnership, it typically includes details such as:-

      • Name and address
      • Business purpose
      • ProBit sharing
      • Role and responsibility • Decision making

      • Duration of partnership
      • Withdrawal or retirement
      • Interest on capital and loans • Accounting records
      • Dissolution
      • Name of the partners

      MERITS:-

      1. Easy formation
      2. More capital available 3. Flexibility
      4. Secrecy
      5. Keen interest
      6. Protection
      7. Diffusion of risk

8.More diverse skills and expertise

LIMITATIONS

1. Limited capital
2. Unlimited liability
3. No public confidence
4. Non – transferability of interest 5. Uncertainity
6. Conflict among partners
7. Risk implied authority

JOINT HINDU FAMILY FIRM

A joint Hindu family is a form of business organization in India that is governed by HINDU LAW. It consist of the HINDU Undivided Family(HUF) who pool their resources together for carrying on a family business. The business is managed by the head of the family , know as “KARTA” and other family members called coparceners

LIMITED LIABILITY PARTNERSHIP

A limited liability partnership(LLP) is a type of business structure that combines elements of partnership and corporation , providing limited liability to its partners.

1. Regulation Act
2. Minimum partners required 2 ,maximum no limit
3. Governance structure
4. Management rests to the partners who are authorized by LLP agreement 5. Transfer of interest]
6. Audit
7. Annual Meeting is not mandatory

COMPANY FORM OF ORGANISATION

It refers to a legal entity where a group of people know as share holders , pool their resources to achieve common business goals. This form of organization is characterized by limited liability for its owners and a separate legal existence from its shareholders. Companies can be public or private and they can take various legal structures such as limited liability companies (LLC) or corporation

MAIN FEATURES:-

  1. Incorporation

  2. Artificial person:- a company regarded as a artificial person as it is created by law and can be effected only by law

  3. Separate legal entity:- a company has distinct entity separate from its members

  4. Common seal

  5. Perpetual succession:-a joint stock company has continues existence until its

    legally dissolved

  6. Separation of ownership and management

  7. Minum2 members maximum no limit

  8. Limited liability

  9. Transferability of shares

10. Rigidity of object:- the company cannot take up new business without

changing the object clause

11. Statutory regulation

CLASSIFICATION OF COMPANIES
1. ON THE BASIS OF MODE OF INCORPORATION:-

  • STATUTORY COMPANY:- its created by a special act of legislature or parliament. These companies are established for fulfill specific [public purposes and often operate in industries where public interest involved.

  • REGISTERED COMPANY:- a company which is incorporated through registration with the Registrar of companies under the Companies Act. All companies established under the private sector belongs to this category

  • CHARTERED COMPANY:-a company which is incorporated under a special Royal Charter granted by the Monarch is called “Chartered Company”

    2. BASED ON THE LIABILITY

  • UNLIMITED COMPANIES:-a company in which the liability of the members is unlimited is called unlimited companies, at the time of winding up they have to pay debts from their necessary personal assets

  • COMPANIES LIMITED BY GUARANTEE:- in some companies members give guarantee for the debts of the company up to a certain limit in addition to the share held by them

  • COMPANIES LIMITED BY SHARES:- in this the liability of the members is limited the amount of shares held by them

    3. ON THE BASIS OF THE OWNERSHIP

  • PRIVATE LIMITED COMPANY:-a private limited company means a company restrict the right to transfer it shares, members minimum2 maximum 200, and prohibited any invitation to the public to subscribe for anu shares or debenture of the company

  • PUBLIC COMPANY:- a company which shareholders have the right to transfer the share, member of shareholders mimmum7 maximum no limit

  • GOVERNMENT COMPANY:- a company which is not less than 51% of the paid up share capital is held by the Central Government , or by State Government

    4. ON THE BABSIS OF THE JURISDICATION

  • NATIONAL COMPANY:- when operation of the company confined within the boundaries of the country in which its registered

  • MULTINATIONAL COMPANY:-when the operation of the company are extended beyond the boundaries of the country which is registered

    MERITS OF COMPANY FORM OF ORGANISATION

    1. Large capital
    2. Limited liability
    3. Stability of existence
    4. Economies of scale
    5. Scope for expansion
    6. Public confidence
    7. Transferability of shares 8. Professional management 9. Tax beneBit

10. Risk diffused

LIMITATIONS

1. Difficulty in formation
2. Lack of secrecy
3. Delay in decision making
4. Neglect minority interest
5. Lack of personal interest
6. More government restriction 7. Fradulent management

ONE PERSON COMPANY(OPC)

It’s a legal structure designed for business with a single owner • Single ownership
• Limited liability
• Separate legal entity

• Nominee director :

SMALL COMPANY

It generally refers to a business that meets certain criteria for size, turnover and number of employees.

• Limited size
• Simplified reporting • Ease of management • Local
• Flexibility

CO-OPERATIVE FORM OF ORGANISATION

A cooperative organization is a business or group of where members collectively own and operate it for mutual beneBit , sharing decision making and often distributing proBit based on participation

Main features:-

  1. Voluntary association

  2. Autonomy any stability

  3. Democratic management

  4. Capital:- capital procured from members In the form of share capital, the

    major part of capital raised by loan from the government and the apex

    cooperative institution

  5. Government control

  6. Service motive

  7. Limited return on capital

  8. Distribution of surplus:- surplus proportion to members based on they

    have done with the society

CLASSIFICATION OF COOPERATIVES

  1. Consumer cooperative:- owned and operated by consumer who come together to buy goods and services in bulk, often secure better price and quality

  2. Producer’s cooperative:- formed by producer’s manufactures who collaborate to process, market or sell their products collectively

3.Marketing co-operatives:- when the produce’s from cooperative society for the purpose of arranging the sale of their output

4. Housing co-operatives:- this society mainly operate in urban areas , they are mainly formed to provide housing facility to its members

5. Credit co-operatives:- financial co-operatives where members pool savings and provide loan to each other, promoting financial inclusion, it classified into two credit agriculture and non-credit agriculture societies

6. Agricultural co-operative:- created by framers to pool resources for activities like purchasing supplies, processing and marketing agricultural products

7.Farming co-operatives:-these society are most helpful to small and marginal farmers and enable them to get the advantages of large scale operations

Other cooperative societies are:-processing co-operative, constriction co-operatives, transport co-operatives, fishery co-operatives , diary co-operatives .. etc...

MERITIS

1. Easy formation
2. Limited liability
3. Social services
4. State assistance
5. Open membership
6. Supply of goods at cheap rates

LIMITATIONS

1. Lack of business acumen 2. Absence of mutual interest 3. Lack of interest
4. Lack of co-ordination
5. Corruption
6. Lack of secrecy
7. Insufficient motivation

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