100 Days Commerce Pro Series - Day 11

Forms of Business Organizations

Definition: A business in which a single person is the owner and all profits and losses are theirs.
Features:
- Single owner
- Minimal legal formalities
- Unlimited liability
- Powers and decision making with the individual
- Lack of business continuity
Merits:
- Quick decision-making ability
- Confidentiality of information
- Direct incentive
- Personal satisfaction
- Easy formation and closure
Demerits:
- Limited resources
- Limited lifespan of the business
- Unlimited liability
- Limited managerial capacity

Definition: An association of two or more people who come together to run a business.
Features:
- Formation under Indian Partnership Act 1932
- Agreement by partners
- Unlimited liability
- Risk sharing
- Collective decision-making
- Lack of business continuity
- Minimum 2 and maximum 50 partners
- Legal business
Merits:
- Easy formation and closure
- Balanced decision-making
- More resources
- Risk sharing
- Confidentiality of information
Demerits:
- Unlimited liability
- Limited resources (compared to a company)
- Potential for conflict
- Lack of business continuity
- Lack of public trust

Differences between Sole Proprietorship and Partnership
Merits and demerits of Sole Proprietorship
Merits and demerits of Partnership
Thought for tomorrow: Which business would you choose: Sole Proprietorship or Partnership