Forms of Business Organisation
 

The following are the various forms of business organisation:

• Sole proprietorship
• Joint Hindu family business
• Partnership
• Cooperative society
• Joint stock company

➢ Meaning: Sole proprietorship is a form of business that is owned, managed and controlled by a single individual (known as the sole proprietor) who is the sole recipient of all the profits earned by the business and bears all the losses.
 

➢ Features of sole proprietorship

1. No legal formalities are involved in forming or closing down a sole proprietorship business.
2. A sole proprietor has unlimited liability, which implies that the personal assets of the proprietor will be used in case the business assets fall short of the amount required for debt payments.
3. The sole proprietor is the single recipient of all the profits of the business and bears all the risks.
4. He or she takes all the business decisions independently and enjoys total control over the business operations.
5. The sole proprietorship business has no legal identity separate from its owner.
6. It lacks business continuity in the sense that such situations as the death, ailment or bankruptcy of the sole proprietor may cause its closure.
 

➢ Merits of sole proprietorship

A sole proprietor enjoys the following benefits.
1. Ease of formation and closure of business, as no legal formalities are required for setting up or for closing down the business
2.  Complete and independent control over the business, thereby enabling quick decision-making
3. A direct incentive to operate the business efficiency and effectively, being the sole recipient of the profits
4. High confidential…