This document discusses different forms of business organizations including sole proprietorship, partnership firms, joint Hindu family firms, cooperative firms, and joint stock companies. It provides details on the key features, advantages, limitations and suitability of sole proprietorship businesses. It also explains the characteristics of partnership firms including types of partners and contents of a partnership deed. Additionally, it covers joint Hindu family firms and cooperative societies, highlighting their features, merits and types. Finally, it compares the different forms of business organization and provides an overview of types of companies.

1. FORMS OF BUSINESS
ORGANISATION
Pankaj Saikia
PGT-Commerce
Modern English School

2. Pankaj Saikia-2021
FORMS OF BUSINESS ENTERPRISES
SOLE
PROPRIETORSHIP
PARTNERSHIP
FIRMS
JOINT HINDU
FAMILY FIRM
COOPERATIVE
FIRMS
JOINT STOCK
COMPANY
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3. SOLE PROPRIETORSHIP
Sole proprietorship business means the
form of business that is owned and
controlled by a single owner and bears
all the risks alone and entitled to enjoy
all the profit of the business.
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SOLE:- ONE OR SINGLE
PROPRITOR:- OWNER

4. FEATURES OF SOLE
PROPRIETORSHIP
1. Single owner.
2. Formation and closure on discretion of owner.
3. Unlimited liability.
4. Sole risk bearer and recipient of entire profit.
5. Control by discretion of the owner.
6. No separate legal entity.
7. Shorter life span as dependent on life of owner.

5. ADVANTAGES OF SOLE
PROPRIETORSHIP
1. Quick decision making.
2. Easy to maintain business secrecy.
3. Direct incentive (profit or loss).
4. Independent operation and self accomplishment.
5. Ease of formation and closure.
6. Flexibility in operation.
7. Personal touch with customer and supplier.
8. Employment generation for self and others.

6. LIMITATIONS OF SOLE
PROPRIETORSHIP
1. Limited resources. (As only one contributor)
2. Uncertainty of return and employment.
3. Unlimited liability. (sole bearer of all risk)
4. Limited managerial and technical ability.
5. Possibility of victimised by wrong decisions.
6. No separate legal entity.
7. Shorter life span as dependent on life of owner.

7. SUITABILITY OF
SOLE PROPRIETORSHIP
Sole proprietorship business is considered to be
useful for following types business.
1. Small business that requires less capital and
limited managerial expertise. ( Ex:- Retail Store)
2. In the business that requires higher personal care
attention to satisfy customer. (Ex:- Tailoring)
3. In the business where the demand of product is
often influenced by seasonal trend or fashion.
( Ex:- Toys manufacturing and trade)

8. PARTNERSHIP FIRMS
• Partnership is the form of
business organisation owned
jointly by two or more people,
managed jointly by all or any
one or more of them and share
the profit and losses equally or
in an agreed ratio.
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9. FEATURES OF
PARTNERSHIP
1. Formed by two or more people.
2. Governed by Indian Partnership Act- 1932.
3. Unlimited liability.
4. Joint risk bearing and sharing of profit.
5. Joint decision making and joint control.
6. No separate legal entity.
7. Shorter life span as dependent on life of partners.

10. BENIFITS OF PARTNERSHIP
1. Easy formation and closure.
2.Balanced decision making.
3. Larger financial resources.
4. Risk sharing.
5. Ease of maintaining secrecy.
6.Better management.
7.Flexibility in operation.

11. LIMITATIONS OF PARTNERSHIP
1. Unlimited liability.
2. Limited Resources.
3. Possibility of conflicts.
4. Disruption in continuity.
5. Delay in decision making.
6. Lack of public confidence.

12. LIMITED LIABILITY PARTNERSHIP
• Limited liability partnership is a corporate
form of organisation that provides the
benefit of limited liability but allows its
partners the flexibility oforganising
internal structure as a partnership based
on the agreement among them. It gives
duel benefit of being a corporate entity
and a partnership organisation.
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13. FEATURES OF LIMITED
LIABILITY PARTNERSHIP
1. Separate legal entity.
2. Perpetual existence.
3. No maximum limit of partners.
4. Designated partners.(at least 2 members and
one must be Indian)
5. Limited liability of partners.
6. Does not comply by Partnership Act-1932.

14. PARTNERSHIP DEED
The agreement based on which the
partners decide to carry on a partnership
business is known partnership deed. It
specify the rights and responsibilities of
partners and serve as a guide to resolve
dispute if any arise among partners.
As per Partnership Act-1932 it is not
mandatory to have a deed or it can be an
oral agreement also.
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15. Major contents of partnership deed
1. Name and address of firm and partners.
2. Nature of business.
3. Duration of Partnership (expected life of firm).
4. Capital contribution of partners.
5. Maintenance of account and dealing with bank.
6. Management of business.
7. Profit sharing ratio among partners.
8. Salary or commission payable to partners.
9. Process of dispute settlement.
10.Mode of dissolution and settlement of account.

16. TYPES OF PARTNERS
1. Active Partner:- Takes active part in conduct of
business, contribute to capital and get share of
profit .
2. Sleeping or dormant Partner:- Contribute to
capital and take share of profit but do not take
actively work in business.
3. Secret partner:- Work as a regular partner
without disclosing involvement in partnership to
outsiders.

17. TYPES OF PARTNERS
4. Nominal or Ostensible Partner:- Neither takes
any part in conduct of business nor contribute to
capital nor take share of profit but lend his / her
name as partner.
5. Partner by Estoppel:- Not a real partner of a
business but present him or herself as a partner
by word spoken or written to any outsider and
become liable for conduct of partnership to
outsider to whom he/she represented in the eye of
law. Such a person is also known as Quasi Partner
or Partner by Holding Out.

18. SUITABILITY OF PARTNERSHIP
Partnership business is considered to be useful for
following types business.
1. Limited time business involve in activities like
construction, providing legal or medical service
etc.
2. Business with moderate capital requirement like
wholesale trade, mercantile house, small
production unit, etc.
3. Business that requires specialised skill of more
than one people like musical band.

19. JOINT HINDU FAMILY BUSINESS
• The Hindu Undivided Family Firm is a form
of business organisation own by an
undivided Hindu family. Source of capital
of such business derived from inherited
property and the affairs of the business is
managed by head of the family (known as
Karta) with unlimited liability. The liability
of other members of the family (known as
Coparceners) is limited.
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20. 6/5/2021 Pankaj Saikia-2021 20
Features of
Joint Hindu
Family
Business
Long life of
business as it
continues for
generations.
Liability of
Coparceners
are limited
Minors of the
family also
member of
business
Membership
by birth and
marriage
Control and
managed by
Karta
Liability of
Karta is
unlimited.

21. TYPES OF JHF BUSINESS
Based on the membership and control there are
two types of Joint Hindu Family Business found
in India.
1. Dayabhaga: Both male and female member of a family is
considered as member of their family business. This system
is found in West Bengal.
2. Mitakshara:- Only the male members are considered as
the member of their family business. This system is
applicable in all over India except West Bengal. However,
after the amendment in Hindu Succession Law in 2004, the
female members are now enjoying equal right in ancestral
property and considered as member with equal rights.

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Advantages of
Joint Hindu
Family
Business
Continuation
of business for
long time.
Limited
liability of
coparceners.
Easy to
maintain
business
secrecy.
Better
relation with
customers.
Effective
Control.
(as major
decisions are
taken by Karta
only)

23. COOPERATIVE SOCIETY
Co:- Joint or Collective.
Operate:- Work
Co-Operative:- Working jointly
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A cooperative organisation is a voluntary
association of individuals who works together for
benefit of its members. Such organisation may
carry on any economic activity permitted by law.
Cooperative societies are registered under and
regulated by Cooperative Societies Act-1932.

24. 6/5/2021 Pankaj Saikia-2021 24
Features of
Cooperative
societies
Voluntary
membership Limited
liability of
members
Managed
by elected
body
Separate
legal entity.
Equal rights
of
members.
Service
Motive

25. FEATURES OF LIMITED
LIABILITY PARTNERSHIP
1. Separate legal entity.
2. Perpetual existence.
3. No maximum limit of partners.
4. Designated partners.(at least 2 members and
one must be Indian)
5. Limited liability of partners.
6. Does not comply by Partnership Act-1932.

26. MERITS OF COOPERATIVES
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• Only ten members can form a
cooperative by registering under
Cooperative Societies Act-1932.
Ease of
formation
• Managed with democratic principle
and one member one vote system
Equal voting
right
• Liability of each member is limited
to their capital contribution.
Limited
Liability

27. MERITS OF COOPERATIVES
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• Life of a cooperative is not
dependent on life of any natural
person and hence can continue for
indefinite period.
Stable
existence
• As formed for mutual help
cooperatives provides goods or
services at no profit no loss basis.
Economic
operation
• Cooperatives plays a significant role in
economic development and therefore
supported by government.
Support
from
Government

28. LIMITATIONS OF COOPERATIVES
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• Capital is mobilised with the contributions
made by the members only, so it is limited.
Limited
Resources
• Cooperatives are unable to afford to appoint
expert managers.
Inefficient
Management
• Cooperatives have legal obligation to
disclose its accounts and other information
at regular interval.
Lack of
Secrecy
• Variety of rules and regulations from the
government often restrict a cooperative from
working independently.
Government
intervention

29. LIMITATIONS OF COOPERATIVES
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• Difference in opinion among the members
often disturb continuity in operation.
Possibility of
conflict
• Cooperatives are not allowed to pay dividend
beyond 6.25%. Which restrict the urge to work.
Lack of
Motivation
• Often the office bearers of co-operatives are
found in involving corrupt practices.
Mis-
Management
• As decisions are taken in consultation it requires
time and results delay in decision making.
Delayed
decision

30. TYPES OF COOPERATIVES
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• Carry on trade activities to get rid of
exploitation from middlemen and
ensure regular supply at reasonable
price.
Consumer’s
cooperative
• Group of small producers aimed at
mutual help to fight against
competition from large producers.
Producer’s
cooperative
• Small producers collect their produces
in to a common stock in order to get
market and good selling price.
Marketing
cooperative

31. TYPES OF COOPERATIVES
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• Small farmers pull their resources
and carry on collective farming to
get the benefit of economy of large
scale operation.
Farmer’s
cooperative
• Provide direct loan to the members
at comparatively lower rate of
interest.
Credit
cooperative
• Acquires a plot of land and construct
and manages house for its members
(mostly found in urban areas).
Housing
cooperative

32. DIFFERENCE BETWEEN PARTNERSHIP
AND COOPERATIVE SOCIETY
BASIS OF DIFFERENCE PARTNERSHIP COOPERATIVE
Minimum no of members 2 10
Main objective Profit Service.
Registration Optional Compulsory
Separate legal status from members No Yes
Governed by Partnership Act-1932 Cooperative society
Act- 1912
Liability of members Unlimited Limited
Audit of Account Not necessary Legally compulsory
Maximum dividend or share in profit No limit Not beyond 6.25%.
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33. COMPANY
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• Company is a form of business
organisation with a separate legal
existence created by a process of law.
• The capital of a company is formed with the
contribution of its members or shareholders. As
in a company the money contributed by
shareholders are brought in to a common stock,
the companies are also known as Joint Stock
Company.

34. FEATURES OF COMPANIES
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• Company is considered as an artificial
person created by law. Unlike a natural
person it is free from death or insanity.
Artificial
Person
• A company can enter in to any contract legally it
its own name. It can sue and can be sued in its
own name.
Separate legal
identity
• A company comes into existence only after
getting the certificate of incorporation from
Registrar of companies.
Formation with
registration
• Life of a company is not affected by the life of
any natural person. It can come to an end only
through a process of law like its birth.
Perpetual
Existance

35. FEATURES OF COMPANIES
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• Company is managed by a professional
management team appointed by Board of
Directors elected by members.
Control and
Management
• The member or shareholders are not personally
liable for any debt of the company. They are liable
only up to the unpaid value of their shares.
Limited
Liability
• A company can not sign like a natural
person. A common seal is used to
authenticate as approval of the company
Common Seal
• Risk of loss in a company is shared among a large
number of members. In case of loss maximum limit of
risk of member is the value of shares held by them
Risk Bearing

36. DIFFERENCE BETWEEN PARTNERSHIP
AND COMPANY
BASIS OF DIFFERENCE PARTNERSHIP COMPANY
Regulated by Partnership Act 1932 Companies Act 1956
Minimum no of members 2 Private-2, Public-7
Maximum no of members 100 Private-200, Public- unlimited.
Separate legal existence No Yes
Liability of members Unlimited Limited
Registration Optional Compulsory
Life of business Depend on life of partners Perpetual existence
Audit of Accounts Decided by partners Legally mandatory
Legal process for closure Not mandatory Mandatory
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37. DIFFERENCE BETWEEN COMPANY
AND COOPERATIVE SOCIETY
BASIS OF DIFFERENCE COMPANY COOPERATIVE
Minimum no of members Private-2 and Public-7 10
Main objective Profit Service.
Voting right One share one vote One member one
vote
Governed by Companies Act-1956 Cooperative society
Act- 1912
Payment of registration fee and
stamp duty
Must Exempted from
paying.
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38. MERITS OF COMPANY
1. Limited Liability of Members.
2. Transferability of shares.
3. Perpetual succession.
4. Vast financial Resources
5. Professional Management.
6. Diversified Risk.
7. Easy Expansion.

39. DEMERITS OF COMPANY
1. Complex process of formation.
2. Need to oblige many laws.
3. Difficulty in maintaining secrecy.
4. Impersonal work environment.
5. Delay in decision making.
6. Oligarchic Management.
7. Majority role and conflict.
8. Difficulty in winding up.

40. Pankaj Saikia-2021
Types of Companies
Private
company
Public
company
Government
company
Foreign
Company
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41. PRIVATE COMPANY
A COMPANY WITH THE GIVEN FEATURES CAN BE
TERMED AS PRIVATE COMPANY .
1. Has minimum 2 and maximum 200 members.
2. Has restriction in transfer of shares.
3. Does not invite public for subscription of shares.
4. Can start business immediately after getting the
certificate of registration / incorporation.
5. Write the words ‘Private Limited’ or ‘Pvt. Ltd.’ at
the end of its name.

42. PUBLIC COMPANY
A COMPANY WITH THE FOLLOWING FEATURES CAN BE
TERMED AS PUBLIC COMPANY .
1. Has minimum 7 and maximum unlimited
number of members.
2. No restriction in transfer of shares.
3. Can invite public for subscription of shares.
4. Can start business after getting the certificate
for commencement of business.
5. Write the words ‘Limited’ or ‘Ltd.’ at the end
of its name.

43. DIFFERENCE BETWEEN PRIVATE AND
PUBLIC COMPANY
BASIS OF DIFFERENCE PRIVATE COMPANY PUBLIC COMPANY
Minimum no of members 2 7
Maximum no of members 200 Unlimited.
Minimum no of Director 2 3
Minimum paid up capital No minimum limit Rs. 5,00,000.
Prospectus / statement in lieu of prospectus Not issued Compulsory
Transfer of share Restricted Open
Holding statutory meeting Not necessary Legally compulsory
Need of certificate to commence Business No need Must
Qualification shares for directors Not necessary Compulsory
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44. PRIVILAGES ENJOYED BY
PRIVATE COMPANY
1. Can come in to existence with 2 members only.
2. Can have minimum two directors only .
3. No need to invite public subscription.
4. No minimum subscription for issue of shares.
5. No need of additional certificate for commencing
business.
6. Exemption from holding Statutory meeting.
7. Not mandatory to maintain index of members.
8. Can issue shares with unequal voting rights.

45. GOVERNMENT AND FOREIGN
COMPANY
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• Majority shares (not less than 51%
of paid up share capital) is owned
by the central government, or by
state government or governments
or jointly by central and state
government or governments.
Government
Company
• Incorporated or registered in
outside India and have a place of
business in India in any form or
mode.
Foreign
Company

46. CONSIDERATIONS FOR CHOICE
OF FORM OF ORGANISATION
1. Nature of business activity.
2. Amount of capital requirement.
3. Formalities and cost of formation.
4. Extent of liability of members.
5. Expected life of business.
6. Managerial ability and talent required.
7. Desire and degree of control in the business.
8. Scope and area of operation.
9. Importance of secrecy in business.
10. Government Regulations.