VII Международная студенческая научная конференция Студенческий научный форум - 2015

The paper deals with the basic forms of business organization. There are a number of ways to structure a business — these include sole proprietorships, different types of partnerships, limited liability companies, and corporations. Each form of business organization has advantages and disadvantages and these are largely influenced by the purpose of the enterprise as well as a number of other factors. This article will provide an analysis of the different types of business organization as well as a brief discussion of the advantages and disadvantages of each structure. It includes the following subjects:

1. Definition, features, merits and limitations of Sole Proprietorship.

2. Definition, features, merits, limitations and types of Partnership.

3. Definition, features, merits and limitations of Cooperative society.

4. Definition, features, merits, limitations and types of Companies.

The paper and the Power Point Presentation may be used in teaching students of colleges and universities, in the classroom, in study groups, in the educational process for training managers and economists. My presentation was used in the classroom for business English in VLSU group MN-112.

TEXT

One of the fundamental initial decisions a new business owner faces is choosing the form of organization for the business. Generally speaking, a person should consider himself or herself to be “in business” once they have begun the operation of an activity for which they expect to be paid. This is true whether or not that person terminates other employment (such as a job that brings a paycheck), or intends to operate that business on a seasonal or short-term basis.

Various forms of business organization:

- Sole proprietorship,

- Partnership,

- Cooperative societies,

- Joint stock company.

Sole Proprietorship

Sole proprietorship is a popular form of business organization and is the most suitable form for small businesses, especially in their initial years of operation. Sole proprietorship refers to a form of business organization which is owned, managed and controlled by an individual who is the recipient of all profits and bearer of all risks.

Features of Sole Proprietorship:

- single ownership;

- unlimited liability;

- risk bearing;

- management and control with the sole proprietor;

- no separate entity;

- lack of business continuity.

Merits of Sole Proprietorship:

- quick decision making;

- confidentiality of information;

- direct incentive;

- sense of accomplishment;

- ease of formation and closure.

Limitations of Sole Proprietorship:

- limited resources;

- limited life of a business concern;

- unlimited liability;

- limited managerial ability.

Partnership

“Partnership may be defined as the relation between persons who agree to share the profits of a business carried on by all or any of them acting for all.”

L.H. Haney

Features of Partnership:

- restriction on transfer of share;

- unlimited liability;

- risk-bearing and sharing of profits;

- agreement;

- has two or more members;

- mutual agency;

Merits of Partnership:

- ease of formation and closure;

- balanced decision making;

- more funds;

- sharing of risks;

- secrecy.

Limitations of Partnership:

- unlimited liability;

- limited resources;

- possibility of conflicts;

- lack of continuity;

- lack of public confidence.

Types of Partnership:

A general partnershipis a business entity that is made up of two or more entities to carry on a trade or business. Each partner contributes money, property, labor, or special skills and each partner shares in the profits and losses from the business;

A limited partnershipis a form of partnership similar to a general partnership, except that in addition to one or more general partners (GPs), there are one or more limited partners (LPs).

Cooperative society

Cooperative organization is a society which has its objective for the promotion of economic interest of its members in accordance with cooperative principles.

Features of Cooperative society:

- voluntary membership;

- separate legal Entity;

- limited liability;

- democratic form of society;

- service motive.

Merits of Cooperative society:

- equality in voting status;

- limited liability;

- stable existence;

- economy in operations;

- support from government;

- ease of formation.

Limitations of Cooperative society:

- limited resources;

- inefficiency in management;

- lack of secrecy;

- government control;

- differences of opinion.

Joint stock company

A joint stock company is an association of persons formed for carrying out business activities and has a legal status independent of its members.

Features of Joint stock company:

- artificial person;

- separate legal entity;

- perpetual succession;

- limited liability;

- common seal;

- risk bearing.

Merits of Joint stock company:

- limited liability;

- transfer of interest;

- perpetual existence;

- scope for expansion;

- professional management.

Limitations of Joint stock company:

- complexity in formation;

- lack of secrecy;

- impersonal work environment;

- numerous regulations;

- delay in decision making;

- oligarchic management.

Types of Companies:

A private limited company is a company that has its share capital divided into private limited company shares.

Public limited companies are similar to private limited companies, but they are able to sell shares to the public.

Questions:

1) What are various forms of business organization?

2) What is a sole proprietorship?

3) What are features of sole proprietorship?

4) What is a partnership?

5) What are merits of Partnership?

6) What are types of partnership?

7) What is a cooperative society?

8) What are limitations of cooperative society?

9) What is a joint stock company?

10) What are types of companies?

Answers to the questions:

1) Sole proprietorship, Partnership, Cooperative societies, Joint stock company.

2) Sole proprietorship refers to a form of business organization which is owned, managed and controlled by an individual who is the recipient of all profits and bearer of all risks.

3) Single ownership; unlimited liability; risk bearing; management and control with the sole proprietor; no separate entity; lack of business continuity.

4) Partnership may be defined as the relation between persons who agree to share the profits of a business carried on by all or any of them acting for all.

5) Ease of formation and closure; balanced decision making; more funds; sharing of risks; secrecy.

6) General partnership; limited partnership.

7) Cooperative organization is a society which has its objective for the promotion of economic interest of its members in accordance with cooperative principles.

8) Limited resources; inefficiency in management; lack of secrecy; government control; differences of opinion.

9) A joint stock company is an association of persons formed for carrying out business activities and has a legal status independent of its members.

10) Private limited companies and public limited companies.

Key words:

- Sole proprietorship,

- Partnership,

- Cooperative societies,

- Private limited company,

- Public limited company.

Bibliography:

1) Eisenberg Melvin A. Corporations and Other Business Organizations: Statutes, Rules, Materials and Forms. – Foundation Press, 2011. - P. 2192. - ISBN: 1599419467

2) Kraakman Reinier H. Anatomy of Corporate Law: A Comparative and Functional Approach. - New York: Oxford University Press, 2010. - P. 554. - ISBN 0199260635

3) Lowry, John; Dignam, Alan. Company Law. - New York: Oxford University Press, 2009. - P. 463. - ISBN 0199284466

4) Michael Solomon; Mary Anne Poatsy; Kendall Martin. Better Business. - Boston: Pearson, 2013. - P. 415. - ISBN: 0133059049

5) Steingold Fred. Legal Guide for Starting & Running a Small Business. - Berkeley, California: Nolo, 2011. - P. 464. - ISBN: 1413313817

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