What Are The Forms Of Business Ownership – Businesses are also classified by ownership and deciding on the type of ownership is one of the most important business decisions. Ownership decisions have long-term decisions about the future of the company, so it is important that this decision is made in consultation with a lawyer or a chartered accountant.
Factors such as the nature of the company, vision, mission of the company, levels of the company, nature of operations, geographical and political factors etc. .
What Are The Forms Of Business Ownership
Almost every business starts as a sole proprietor because of the ease of business transactions and the relatively small nature of the business. Ownership of the business rests with one person, who usually has full and exclusive decision-making authority. Owners are those who usually own the company’s assets and the profits generated by them.
Advantages And Disadvantages Of The Corporate Form Of Business
The downside is that they also have to take responsibility for liabilities and debts as a whole. The owner and the company are the same in the eyes of the public. The advantage of these types of business ownership is that companies can be easily established under one authority.
The owners have full control over all the decision-making process, which makes it easier for the public and other interested parties to deal with the company. Sole proprietors receive all profits from the business, which they can reinvest or keep for their own use. In the worst case scenario, the company is easily liquidated because the authority rests with one person and reduces multiple decision-making, thereby reducing time.
Unlike sole proprietorships, general partnerships involve two or more people as owners of the business. These people are called business partners and there is a legal agreement between the partners regarding the legality of the business including business aspects, profit sharing, division of work and responsibilities including the option to get out if one or both partners want to end the partnership and settlement. afterwards.
It is a known fact that every partnership ends at some point or time of crisis if well-defined processes are not defined. This is classified as one of the successful types of business ownership if everything works well.
Chapter 2: Forms Of Business Ownership
It’s relatively easy to get started, except that you need to invest a lot of time in drafting a partnership agreement. As all owners contribute funds for the company, the capital of the company increases substantially. Since different people are involved in the ownership, it uses their talents and skills to develop different aspects of the business.
Limited partnership business ownership includes a combination of the above types of sole proprietorship and general partnership. In a limited partnership, several people are named as owners, but the authority for business decisions rests with one or more partners, and everyone else just contributes funds and shares in the profits.
These are called limited partners and they guarantee the invested funds. A limited partnership is relatively easy to set up and can be invested in by people with available finances and investors who know nothing about business because they are only interested in sharing the profits of the business.
This ensures that there is less interference from the other partners in the day-to-day activities of the company, and this in itself is a disadvantage of limited partnership types of business, that although the investors invest money, they will not have a say in the management activities. .
Solution: Forms Of Business Ownership Study Notes
An association of a group of individuals with the objective of sharing the profit by providing the capital required to start a business in the form of shares is called a joint stock company. Equity types of companies overcome most of the disadvantages of partnership types of companies. Usually these types of companies consist of more than 20 people.
The company is registered by providing a suitable name, explaining its vision and mission and registering with the commercial register. The shareholders then elect the board of directors, which is responsible for policy-making, decision-making and is charged with the efficient running of the company. There are two types of joint stock companies:
Private Limited is very common among all types of companies. Capital for the company is raised from business partners who may be active or inactive. Company Pvt. Ltd. the company does not allow shares to be shared or transferred and restricts the public from taking shares.
No need to file consent of directors in Pvt. s.r.o. and does not require a certificate from the commercial register to start business, nor is it required to share a balance sheet or profit and loss statements or hold an annual general meeting as a public company.
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The only thing a Pvt Ltd needs to do is to send a certificate along with a declaration that it does not have more than 50 shareholders. This report must be sent to the commercial register. Pvt sro likes all types of partnerships with the advantage of getting large capital investments.
In this type of company, capital is raised from the public in the form of small amounts of shares with a low par value. The requirement is to have a minimum of 7 shareholders, while the maximum number of shareholders is not limited. Unlike Pvt. Ltd. company, a Public Ltd must register with the Commercial Register, have a board of directors for approval, produce and share a balance sheet, profit and loss statements and hold annual general meetings.
Public limited companies do not have a limit on the transfer of shares, but must audit their accounts annually. The biggest challenge in doing business with limited companies is getting investors or shareholders and their formalities in starting their business. Also, due to the large amount, there is a high chance of fraud within the organization.
Cooperatives are privately owned, combining the functions of a large partnership and a corporation. Members of cooperatives pay to buy shares and the profit is then divided among their members. Each member in cooperative societies has only one vote, which prevents the concentration of power in a few hands.
Business Ownership Crossword
Like a public company, a cooperative has a board of directors and holds regular shareholder meetings. The principle of establishing cooperative societies is establishing cooperation and self-help and obtaining the needs of everyday life at subsidized costs. The advantages of co-operative societies are that it is a democratic form of ownership and the overheads are reduced because the co-operative members can provide honest services and the common man is benefited by co-operative societies.
The public sector falls under the types of business ownership that are wholly owned and controlled by the state. They are also companies that are owned or controlled by the state. These types of business ownership are wholly or partially in the hands of the government, and they are the ones who provide goods and services to society.
Ultimate control over the public sector remains with the state and prevents the unbalanced growth of industries that bring regulation. Capital is not the problem with the public sector and expansion
He has no problem because of government involvement. The public sector is accountable for its results to the state legislature and parliament.
List The Three Principle Forms Of Business Ownership In Construction And Also State The Liability Limits In Each Case.
It is a well-known fact that the public sector is inefficient compared to private companies. The public sector is ideal for those industries that require large financing and are difficult to manage in the private sector and the availability of capital and raw materials is readily available for them.
Disadvantages of the public sector include inefficiency compared to their private counterparts and they usually run into losses due to poor management. There is also too much government interference in the internal affairs of society at management levels.
It is the exact opposite of the fact that public sector enterprises are completely non-governmental organizations. The private sector does not do business where the profit margins are low or where the business is risky. They are often led by entrepreneurs from various industries who have a thorough knowledge of company management.
The profit potential is very high along with the efficiency and at the same time the waste of resources is minimized. Decisions and approvals, if any, are delivered quickly as compared to public sector companies. Another advantage of the private sector is that the government and politicians do not interfere in day-to-day business decisions.
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However, the disadvantages of the private sector include excessive exploitation of workers by companies, and often start-up companies in the private sector require huge capital investment, which is very demanding. These types of business owners also tend to accumulate profits in a select few hands.
Although it is a form of partnership, it is classified separately