Entrepreneurship

2. What is Business?
 An organization or economic system where
goods and services are exchanged for one
another or for money.
 Every business requires some form of
investment and enough customers to whom
its output can be sold on a consistent basis in
order to make a profit.
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3. Forms of Business
Enterprises
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4. Advantages of Sole
Propreitorship
 Easy establishment
 Dynamism
 Quick decisions & implementation
 Maintaining secrecy
 Managerial independence
 Personal interest
 Favourable for small interest
 Low taxation
 Other benefits
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5. Limitations of Sole
Propreitorship
 Unlimited liability
 Limited capital
 Limited capacity
 Short life span
 Faulty decisions
 Unsuitable for big business
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6. Partnership Firm
Relationship between two or more persons who have agreed to share the profits
of a business carried on by all or any of them acting for all
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7. Characteristics of
Partnership Firm
 Agreement based on relation
 Written / Oral / Implied
 Number of Partners
 20 in general & 10 in banking business
 Unlimited Liability
 Legal activities
 Profit motive
 Life span
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8. Contents of Partnership Deed
 Firm’s name & address
 Partner’s name, address, age, gender
 Type of business activities
 Capital of each partner
 Ratio of distribution of profit / loss
 Period & type of firm
 Details pertaining to entry of partner & retirement
 Interest on capital & withdrawals
 Interest on loan from partner
 Remuneration, salary, commission of active partners
 Accounting methods & audit arrangement
 Rights & Duties of partners
 Arbitration clause
 Opening & Maintaining bank account
 Removal of partner
 Authority to sign important documents on behalf of the firm
 Provision for dissolution & settlement of accounts
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9. Types of Partnership
According to
duration
Partnership
at will
Term
Partnership
Specific job
partnership
According to
liability
Unlimited
Liability
Limited
Partnership
According to
business
Banking Firm
General Firm
According to
registration
Registered
Firm
Unregistered
Firm
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10. Types of Partners
 Active Partner
 Sleeping or Dormant Partner
 Nominal Partner
 Partner by Estoppel
 Partner in Profit only
 Minor as a partner
 Partner with limited liability
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11. Merits of Partnership
 Easy establishment
 More efficiency
 More capital
 More creditworthiness
 Maintaining secrecy
 Right decisions
 Distribution of risk
 Contact with customers
 Dynamism
 Decentralisation of economic power
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12. Limitations of Partnership
 Unlimited liability
 Limited duration
 Absence of ownership transfer
 Possibility of dispute
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13. 1. Management – Karta
2.Membership – By birth, minor is also member
3. Liability – Only Karta has unlimited liability
4.Membership Strength – No limit
5. Duration – Continues even after death of Karta
6.Insolvency – Karta & HUF both are declared
insolvents
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14. Co-Operative Society
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15. Advantages of Co-Op Society
 Easy to form – 10 or more members
 Open & voluntary membership
 Democratic management –Exec Committee
 Limited liability
 Separate entity – Death, resignation, insolvency
 Economical – Members give voluntary service
 Encouragement from Government
 Economic uplifting of members – No middlemen
 Social welfare activities – dispensaries, schools
 Low burden of taxes
 Training school of co-operation
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16. Limitations of Co-Op Society
 Limited Capital –Weak members & limit on
shares
 Inefficiency – honorary members
 Government interference
 Difference of opinions amongst members
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17. Joint Stock Company
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18. Characteristics of a Company
 Compulsory registration
 Separate and perpetual existence
 Voluntary membership
 Limited liability
 Transfer of shares
 Common seal
 Management by representatives
 Voting per share
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19. Chartered
Company
Registered
Company
No. Of member
viewpoint
Private Company Public Company
Deemed Public
Company
Liability
viewpoint
Limited Liability
Limited by Share
Capital
Limited by Share
Guarantee
Unlimited
Liability
Control
viewpoint
Holding
Company
Government
Company
Subsidiary
Company
Registration
viewpoint
Indian Company
Foreign
Company
Company
created under
special law
Types of Companies
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20. Advantages of Company
 Limited Liability
 High Capital
 Separate & perpetual existence
 Easy share transfer
 Efficient management
 Democratic management
 Large scale production
 Social benefits
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21. Limitations of Company
 Long & expensive incorporation procedure
 Autocratic management
 Observance of law – More legal interference
 Probability of speculation
 Delay in decision making
 High administrative expenses
 Difficulty in keeping secrets
 High taxation
 Absence of personal interest
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22. Points of Difference Private Company Public Company
Number of Members Minimum 2 & Maximum 50
members
Minimum 7 & maximum
unlimited members
Share transfer Restricted Free
Number of Directors Minimum 2 directors Minimum 3 directors
Invitation to subscribe
for shares
Not allowed Allowed
Provision for minimum
subscription
No provision There is a provision
Name ‘Private Limited’ words are to
be added at the end of the
name
The word ‘Limited’ is to be
added at the end of the name
Beginning of business Immediately after Certificate
of Incorporation
Has to obtain Certificate of
Commencement
Articles of Association Has to prepare AoA Table – A can be accepted
First statutory meeting No need Compulsory within stipulated
time-period
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23. Stages of Formation of Company
1. Promotion
2. Incorporation
3. Commencement of Business
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24. Step 1: Promotion
 Idea
 Primary & extensive tests
 Mobilising the resources
 Making arrangement for finance
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25. Step 2: Certificate of
Incorporation
 Memorandum of Association
 Articles of Association
 List of Directors
 Written consent of Directors
 Acceptance to subscribe for qualification of
shares
 The address of registered office
 Statement of observation of law
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26. Memorandum of Association
1. Name Clause
2. Registered Office Clause
3. Object Clause
4. Liability Clause
5. Capital Clause – Authorised & Paid-Up
6. Association Clause
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27. Step 3: Certificate of
Commencement of Business
(Public Company)
 Prospectus or statement in lieu of prospectus
 Applying to recognised stock exchange
 Determining & getting minimum subscription
 Approving contracts entered prior to
Certificate of Incorporation & Commencement
 Declaration of payment of qualification shares
 Returning money to share applicants
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28. Prospectus
 Main objects
 No. of qualification shares for directors
 Details of Directors
 Details of Auditors
 Application & Allotment amount of shares
 Details of Underwriting Agreement
 Information about Primary Expenses
 Information about Minimum Subscription
 Statement about fictitious name
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30. Limited Liability Partnership
 Concept is still very new in India
 Features of both partnership & company
 Governed by LLP Act, 2008
 Word ‘LLP’ has to be written at the end of the
name
 LLP Agreement
 Compulsory registration
 Foreign nationals can be partners
 Separate legal entity
 Perpetual succession
 LLP has its own common seal
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31. Determining the Form of
Ownership of Business
 Type of business
 Size of business
 Requirement of capital
 Degree of risk
 Need of managerial skill
 Duration of business
 Preference of directors
 Interference of government
 Tax burden 31

32. Factors to be Taken Into Account
While Starting a Business
 Market
 Location
 Financial Requirement
 Government Policy
 Efficiency – Preference of Promoter
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33. “Ethics is what you do when
no one is looking.”
~ George Bernard Shaw
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34. Thank You!!!
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