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Organisational
Forms
Sole Proprietorship
• The simplest and most common form of business ownership, sole
proprietorship is a business owned and run by someone for their own
benefit.
• The business’ existence is entirely dependent on the owner’s decisions, so
when the owner dies, so does the business.
Advantages of sole proprietorship
• All profits are subject to the owner
• There is very little regulation for proprietorships
• Owners have total flexibility when running the business
• Very few requirements for starting—often only a business license
Disadvantages of sole proprietorship
• Owner is 100% liable for business debts
• Equity is limited to the owner’s personal resources
• Ownership of proprietorship is difficult to transfer
• No distinction between personal and business income
Partnership
Partnership
• These come in two types:
• General
• Limited
General Partnership
• In general partnerships, both owners invest their money, property, labor, etc.
to the business and are both 100% liable for business debts.
• In other words, even if you invest a little into a general partnership, you are
still potentially responsible for all its debt.
• General partnerships do not require a formal agreement—partnerships can be
verbal or even implied between the two business owners.
Limited partnerships
• It require a formal agreement between the partners.
• They must also file a certificate of partnership with the state.
• It allow partners to limit their own liability for business debts
according to their portion of ownership or investment.
Advantages of partnerships
• Shared resources provides more capital for the business
• Each partner shares the total profits of the company
• Similar flexibility and simple design of a proprietorship
• Inexpensive to establish a business partnership, formal or
informal
Disadvantages of partnerships
• Each partner is 100% responsible for debts and losses
• Selling the business is difficult—requires finding new partner
• Partnership ends when any partner decides to end it
Limited Liability Company (LLC)
Limited Liability Company (LLC)
• Similar to a limited partnership, an LLC provides owners with
limited liability while providing some of the income advantages
of a partnership.
• Essentially, the advantages of partnerships and corporations are
combined in an LLC, mitigating some of the disadvantages of
each.
Advantages of an LLC
• Limits liability to the company owners for debts or losses
• The profits of the LLC are shared by the owners without double-
taxation
Disadvantages of an LLC
• Ownership is limited by certain state laws
• Agreements must be comprehensive and complex
• Beginning an LLC has high costs due to legal and filing fees
Joint stock company
Joint stock company
• It is a type of business organization that is owned by its investors.
• In a joint stock company the company stock can be bought and
sold by the shareholders.
• Shareholders should be having possession of at least 1 stock of
the company in order to be counted as a partial owner.
Joint stock company
• Joint-stock companies were created to finance endeavors that
were too expensive for an individual or even a government to
fund.
• The owners of a joint-stock company expected to share in its
profits.
Characteristics of a joint stock company
• Independent legal entity
• Limited liability
• Common seal
• Separate ownership and management
• Transferability of shares
• Perpetual existence
• Association of persons
Cooperative Organisation
• A cooperative organisation is an association of persons,
usually of limited means, who have voluntarily joined together
to achieve a common economic end through the formation of a
democratically controlled organisation, making equitable dis-
tributions to the capital required, and accepting a fair share of
risk and benefits of the undertaking.
Cooperative Organisation
• The word ‘co-operation’ stands for the idea of living together and working
together.
• Cooperation is a form of business organisation the only system of voluntary
organisation suitable for poorer people.
• It is an organisation wherein persons voluntarily associate together as human
beings on a basis of equality, for the promotion of economic interests of
themselves.
Cooperative Organisation
• The cooperative movement has three objectives—Better living, Better business and
Better farming.
• A cooperative organisation always prefers
• Service instead of profit maximization,
• Survival of the weakest instead of survival of the fittest,
• Self-help and self-reliance instead of dependence on external bodies.
• Development of moral character of members instead of emphasis on pure material
development.
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Organisational Forms.pptx

  • 2. Sole Proprietorship • The simplest and most common form of business ownership, sole proprietorship is a business owned and run by someone for their own benefit. • The business’ existence is entirely dependent on the owner’s decisions, so when the owner dies, so does the business.
  • 3. Advantages of sole proprietorship • All profits are subject to the owner • There is very little regulation for proprietorships • Owners have total flexibility when running the business • Very few requirements for starting—often only a business license
  • 4. Disadvantages of sole proprietorship • Owner is 100% liable for business debts • Equity is limited to the owner’s personal resources • Ownership of proprietorship is difficult to transfer • No distinction between personal and business income
  • 6. Partnership • These come in two types: • General • Limited
  • 7. General Partnership • In general partnerships, both owners invest their money, property, labor, etc. to the business and are both 100% liable for business debts. • In other words, even if you invest a little into a general partnership, you are still potentially responsible for all its debt. • General partnerships do not require a formal agreement—partnerships can be verbal or even implied between the two business owners.
  • 8. Limited partnerships • It require a formal agreement between the partners. • They must also file a certificate of partnership with the state. • It allow partners to limit their own liability for business debts according to their portion of ownership or investment.
  • 9. Advantages of partnerships • Shared resources provides more capital for the business • Each partner shares the total profits of the company • Similar flexibility and simple design of a proprietorship • Inexpensive to establish a business partnership, formal or informal
  • 10. Disadvantages of partnerships • Each partner is 100% responsible for debts and losses • Selling the business is difficult—requires finding new partner • Partnership ends when any partner decides to end it
  • 12. Limited Liability Company (LLC) • Similar to a limited partnership, an LLC provides owners with limited liability while providing some of the income advantages of a partnership. • Essentially, the advantages of partnerships and corporations are combined in an LLC, mitigating some of the disadvantages of each.
  • 13. Advantages of an LLC • Limits liability to the company owners for debts or losses • The profits of the LLC are shared by the owners without double- taxation
  • 14. Disadvantages of an LLC • Ownership is limited by certain state laws • Agreements must be comprehensive and complex • Beginning an LLC has high costs due to legal and filing fees
  • 16. Joint stock company • It is a type of business organization that is owned by its investors. • In a joint stock company the company stock can be bought and sold by the shareholders. • Shareholders should be having possession of at least 1 stock of the company in order to be counted as a partial owner.
  • 17. Joint stock company • Joint-stock companies were created to finance endeavors that were too expensive for an individual or even a government to fund. • The owners of a joint-stock company expected to share in its profits.
  • 18. Characteristics of a joint stock company • Independent legal entity • Limited liability • Common seal • Separate ownership and management • Transferability of shares • Perpetual existence • Association of persons
  • 19. Cooperative Organisation • A cooperative organisation is an association of persons, usually of limited means, who have voluntarily joined together to achieve a common economic end through the formation of a democratically controlled organisation, making equitable dis- tributions to the capital required, and accepting a fair share of risk and benefits of the undertaking.
  • 20. Cooperative Organisation • The word ‘co-operation’ stands for the idea of living together and working together. • Cooperation is a form of business organisation the only system of voluntary organisation suitable for poorer people. • It is an organisation wherein persons voluntarily associate together as human beings on a basis of equality, for the promotion of economic interests of themselves.
  • 21. Cooperative Organisation • The cooperative movement has three objectives—Better living, Better business and Better farming. • A cooperative organisation always prefers • Service instead of profit maximization, • Survival of the weakest instead of survival of the fittest, • Self-help and self-reliance instead of dependence on external bodies. • Development of moral character of members instead of emphasis on pure material development.