Professional Documents
Culture Documents
NagendraPrasadMBA CMR-CBS 1
Liability
•Every company has to repay its liability to its creditors
•Every entrepreneur liable to creditor at starting of business
•Even in sole proprietorship, the person or company has to
clear his labiality at the time of winding of business
Flexibility
•Sole proprietorship is best for any alterations or decision
making
•In partnership business flexibility is very difficult because it is
depend up on the partners
•So it is maximum in sole proprietorship and minimum in
partnership
NagendraPrasadMBA CMR-CBS 2
Taxation
•Both sole proprietorship and partnership follows
“PROGRESSIVE TAX SYSTEM (PTS)”
•PTS is defined as tax rate increases with increases of income
and decreases with decrease of income
Control
•Every entrepreneur should has control over his business and
also sacrifice on his returns
•It is possible in sole proprietorship and not easily possible in
partnership because board of directors are existed
Survival or continuity
•Every entrepreneur expects continuity of his business
•Without business the company can’t survive
NagendraPrasadMBA CMR-CBS 3
Business secrets
•Maintaining business secrets in sole proprietorship is very
easy and safe where as in partnership it is difficulty and
unsafe
Government rules and regulations
•They are mandatory for running of any company or firm
•Sole proprietorship is very free from all rules and regulations
•Joint company is governed by rules and regulations of
government
NagendraPrasadMBA CMR-CBS 4
Various form of ownership
•Sole proprietorship
•Partnership
•Joint stock company
•Cooperative organisation
NagendraPrasadMBA CMR-CBS 5
I.Sole proprietorship
Definition: - The individual form of business organisation is an
organisation at the head which stands and individual as the one
who is responsible, who directs its operations and he alone runs
the risk of failure.
Various features of role proprietorship are as follows:-
Individual ownership
Unlimited liabilities
Free from legal formalities
Limited scope of operation
Personal interest
Freedom to start and to end
Monopoly on profit
Business secrecy
NagendraPrasadMBA CMR-CBS 6
Merits of sole proprietorship
NagendraPrasadMBA CMR-CBS 7
Merits of sole proprietorship
NagendraPrasadMBA CMR-CBS 8
Demerits
Limited resources
Lack or funds
Chance of unlimited liability
High risk
Sometimes returns should be sacrificed
Limited managerial ability
Lack of specialisation
Chance of uncertainty
NagendraPrasadMBA CMR-CBS 9
Suitability
NagendraPrasadMBA CMR-CBS 10
II. Partnership
NagendraPrasadMBA CMR-CBS 11
Various features of partnership are as
follows
Plurality of persons
Contractual relationship
Existence of business
Profit motive
Principal agent relationship
Unlimited liability
Restriction on transfer of interest
Implied agency
NagendraPrasadMBA CMR-CBS 12
Merits of partnership
Easy formation
More financial resources
Collective decision making
Sharing of risk
Flexibility
Complementary skills
Credit worthiness
Business secrecy
NagendraPrasadMBA CMR-CBS 13
Demerits of partnership
Unlimited liability
Uncertain existence
Limited funds
Transfer of shares
NagendraPrasadMBA CMR-CBS 14
Suitability of partnership
NagendraPrasadMBA CMR-CBS 15
III.Joint stock company
Definition:-A company is an artificial person created by
law having a separate entity with a perpetual succession
and a common real.
Various features of joint stock company are as follows:-
An artificial person created by law
Separate legal entity
Perpetual succession
Common seal
Limited liability
Representative management
Right to sue
Transfererability of shares
NagendraPrasadMBA CMR-CBS 16
Merits of Joint Stock Company:-
Limited liability
Diffused risk
More financial resources
Transferability of ownership
Perpetual existence (separate legal for share holders)
Economies of scale (operating to lead our economy)
Professional management (ruling by best
professionals)
Capital formation (mobilising of funds)
NagendraPrasadMBA CMR-CBS 17
De Merits of Joint Stock Company:-
NagendraPrasadMBA CMR-CBS 18
Suitability of joint stock company
NagendraPrasadMBA CMR-CBS 19
IV.Cooperative organisation
Definition:-A society which has as its objectives the
promotion of the interests of its members in
accordance with the principles of cooperation.
Merits of cooperative organisation:-
Economy in cost (goods directly purchased-no
middleman)
Democratic management
Service motive
Government regulations
NagendraPrasadMBA CMR-CBS 20
De Merits of cooperative
organisation:-
Limited financial resources
Political interference
Lack of personal interest
Lack of professional management
NagendraPrasadMBA CMR-CBS 21
Suitability of cooperative organisations:-
NagendraPrasadMBA CMR-CBS 22
Legal issues
Registration with director of industries:-
It contains two stages for small scale units, they are
Provisional registration
Permanent registration
NagendraPrasadMBA CMR-CBS 23
Benefits of registering:-
NagendraPrasadMBA CMR-CBS 24
Provisional registration certificate
(PRC):-
Given for pre-operative period only
Obtains facilities for accommodation, land, other
approvals etc.
Obtains various necessary NOCs and clearances from
regulatory bodies such as pollution control board,
labour regulations etc.
NagendraPrasadMBA CMR-CBS 25
Permanent registration certificate (PRC):-
NagendraPrasadMBA CMR-CBS 26
Licensing
According to section-11 industries development and
regulation act (IDR) no industry is to be established
without a license
According to IDR Act, industrial licence would be
required for:-
Establishment of new undertaking
Substantial expansion
Production of a new product
Changing the location of an industrial undertaking
NagendraPrasadMBA CMR-CBS 27
Licensing agencies like:-
NagendraPrasadMBA CMR-CBS 28
Factories Act
NagendraPrasadMBA CMR-CBS 29