Forms of Commercial Organization

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DIFFERENT FORMS OF ORGANISATION

SOLE TRADING CONCERN
▪ Meaning
▪ Features
▪ Advantages
▪ Disadvantages
▪ Suitability

PARTNERSHIP FIRM

▪ Meaning
▪ Features
▪ Merits
▪ Demerits
▪ Kind of partnership firm
▪ Types of partners
▪ Partnership Deed

JOINT HINDU FAMILY BUSINESS
▪ Meaning
▪ Features
▪ Advantages
▪ Disadvantages

JOINT STOCK COMPANY
▪ Meaning
▪ Features
▪ Advantages
▪ Disadvantages
▪ Management
▪ Forms of companies
▪ Features, Merits and Demerits of types of companies
▪ Kinds of companies

CO-OPERATIVE SOCIETY
▪ Meaning
▪ Features
▪ Merits
▪ Demerits
▪ Rights
▪ Duties
▪ Powers & functions
▪ Suitability

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FORMS OF COMMERCIAL ORGANISATION

SOLE TRADING CONCERN

I.Meaning
A Business Organization which is owned and managed by a single person with or without the help of family members is called as sole trader or sole proprietor. The sole trading concern is run on the principle “All is he and he is all in all”.

1.1 Features

1. One-man Ownership and Control
A sole trading concern is owned by an individual. The proprietor is the sole owner and master of the business. He independently manages and controls the business without the interference of any other person. 2. Capital Contribution

In sole tradership, the capital is employed by the owner himself from his personal resources. He may also borrow capital from his friends, relatives and financial institutions. 3. Unlimited Liability

The liability of the proprietor for the debts of the business is unlimited. The creditors have the right to recover their dues even from the personal property of the proprietor in case the business assets are not sufficient to pay their debts. 4. Enjoyment of Entire Profit

The sole trader is entitled to enjoy all profits of the business. Since he is the only person who invested money, he need not share the profit with anybody else. At the same time, he himself should bear the entire loss. So it is said that he owns all and risks all. 5. No Separate Legal Entity

The sole trader and the business are one and the same. A sole trading concern has no legal entity separate from its owner. The sole trader owns the assets and owes the liabilities of the concern. 6. No Special Legislation

Sole tradership is not governed by any special legislation. A partnership firm is governed by the Indian Partnership Act. A joint stock company is governed by the Indian Companies Act and a co-operative society by the Co-operative Societies Act. But sole trader business is not governed by any Act. 7. Local business

Most of the sole trading business confine only to a particular place such as a street, a block or a village. A few sole trading business may cover a large area through a network of a branches. .8. Self Employment

A sole trader uses his own labour to conduct the business. He may employ a few paid servant or use the services of his family members for running the business. 9. Small Capital
A sole trader business can be commenced with a small amount of capital whereas a partnership firm or a company require large capital. 10. Convinence to customers
He deals in day to day local market and offers sales and services that gives lots of convenience to the customers

1.2 MERITS

1. Easy Formation
Sole proprietorship is the only form of organisation where no legal formalities is required. No agreement is required and registration of the firm is not essential. Anybody willing to start a sole-trading concern can do so immediately and without much legal formalities. 2.Direct Motivation

The entire profit of the business goes to the sole trader. Nobody can claim a share in the profit. It motivates him to expand his business activities. 3. Flexibility
It is a highly flexible type of organization. A sole...
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