* Sole-Proprietorship * This is the most oldest and common form of business ownership. It is a individually operated organization. * The sole proprietorship is the form of business ownership which is owned & controlled by a single individual. * A sole proprietorship is a business that is owned and controlled by a single individual * A sole proprietor is an active manager. * Features of Sole Proprietorship Business * Single ownership with self-management * Easy formation * Low Capital Investment * Limited Size * Single authority & control * No separate entity * Individual risk * Free from Govt.
Regulations * Uncertain Stability There are many advantages and disadvantages of sole proprietorship business that is important to know before opening this type of business. Advantages| Disadvantages| Easy entry & exit| Unlimited Liability| Sole profit & losses| Limited Capital| Complete control| Limitation of personal capacity| Use of owners abilities| Lack of stability| Tax breaks| Lack of skilled employees| Maintenance Secrecy| Hindrance of expansion| Prompt decision| Inferior social status| Above all sole proprietorship is an easy formatted business and it is easily diversifiable.
One can easily form this business anytime anywhere if he has money (little amount for business). No major plan is needed to develop this business. It’s the easiest of all. * Partnership * It is a business by two or more people * According to the Partnership Law of 1932, Partnership is the relation between persons who have agreed to share the profit of a business carried on by all or any of them acting for all, persons who have entered into partnership with one another is called individually ‘partner’ and collectively a ‘firm’.
* Partnership is an association of two or more person to carry on as co-owners of a business for profit. To form a partnership business two or more persons must make a contract based on ‘Partnership Deed’. * Partnership Deed includes- * Name & address of business * Business type and aim * Stability of business * Amount of total capital * Partners name, address and profession along with their signs * Rule of profit-loss division * Business producing & directing rules * Accounts security * Partners authorities, responsibilities and duties.
* Each partner takes an equal share of the profits, unless the partnership agreement states otherwise And many other things regarding business Partnership business is of 3 types such as – I. General Partnership II. Limited Partnership III. Joint-Ventures Partnership business’s contract can be based on written contract or a voluntary or an oral agreement. It has some advantage and disadvantage: Advantages| Disadvantages| More Capital| Unlimited Liability| Diversified skill| Potential disagreement| Easy startup| Instability| Tax Advantage| Difficulty of withdrawal|.
Losses are shared| Difficulty of capital| Facility of social connection| Risk of joint responsibility| Reduce autocracy| Expression of secrecy| To form a partnership business at least two people must make a contract (written or unwritten) and invest their money on their selected business area. Partnership business can be registered or not by the law. If the business is registered then the business gets some privilege from Law and Government. Signed partners work together to make profit and serve society through the business. * Corporation.
* As an artificial person recognized by law with a distinctive name, a common seal, a common capital comprising transferable shares of fixed value carrying limited liability and having a perpetual succession. * A company or corporation is an artificial being, invisible, intangible and existing only in contemplation of law. * A corporation is a legal entity that is created under the laws of a state designed to establish the entity as a separate legal entity having its own privileges and liabilities distinct from those of its members. * Features of Corporation * Limited Liability * Statutory responsibility.
* Law created concern * Artificial personality * Much capital * Democratic norm following * Perpetual succession * Common seal * Share capital * Independent nature management * Voluntary organization * Advantages and disadvantages of corporation: Advantages| Disadvantages| Greater and easy Capital| Difficulty of startup| Limited liability| Lack of control| Separate legal entity| Multiple taxation| Highly skilled operation| Lack of secrecy| Retain high performers| Lack of personal interest| Stability| Slow decision making| To form a corporation one or more person must make a decision concerning this.
They have to prepare 2 important things – 1. Memorandum of association, 2. Article of association. Then they have to complete some certain steps to start a corporation. Memorandum of association includes corporation Name clause, Situation and address clause, Object clause, Capital clause, Liability clause, Consent clause. Article of association includes Corporation Operating rules, Directing rules, Shareholder rules, Rules for share, Rules for meeting, Accounting and loan rules, Rule of creating capital and its usage. Justification of a Business Ownership From the three business ownerships –
1. Sole proprietorship 2. Partnership & 3. Corporation I want to own a Sole Proprietorship business. There are some major reasons for my choice that is stated below – * This type of business is controlled by a single owner * There is no separate entity * Owner doesn’t have to share profit with anyone as well as lose * Easy formation & management * Possible to maintain secrecy * Owner has independence over his business & can take immediate decisions * Easy to minimize cost & wastage * There is an advantage to prepare financial statement without any complexity * Facility of showing individuality.
* Authority can apply innovative ideas at his own risk * Free of government rules & regulation specially law enforcement * No need to register or pay separate taxes for business * Proprietor can dissolute his business any time * Contribution to the Society: * It’s a kind of mobile business that can be formed & shifted anywhere. So this type of business renders a greater service through both urban & rural area * It assist in large scale of production * Self-employment opportunity increases * Preserves individuality whether earning livelihoods.
* Sole Proprietorship business creates market of goods and services * Consumer demand changes day by day. This type of business can supply product according to the current demand of customers * Proper distribution of wealth in society is possible by this business * This business can adjust with changing situation of society to satisfy people * A large number of people saves their income to invest in small business like this type, as a result the country assets increased * Social standard of living is raised by this type of business Above all we can say that Sole Proprietorship business contributes society a lot.
Now, from a recent survey states that above 80% of business in Bangladesh run through Sole Proprietorship and 72% of small industries structure is Sole Proprietorship. So I think, Sole Proprietorship is the perfect type of business to earn profit & serve the society in the aspect of Bangladesh. Resources: * Slide notes from class * Oxford Dictionary of Business * http://en. wikipedia. org/wiki/Corporation * http://www. businesslink. gov. uk/bdotg/action/detail? itemId=1073789609&type=RESOURCES * Business Principles & Practice Part I by Md. Khalekuzzaman.