Content

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Sole Proprietorship. Features. Advantages & Disadvantages . Partnership. Characteristics. Various Aspects of Partnership Firm. Types of Partners. Advantages & Disadvantages. Joint Hindu Family Firm. Advantages & Disadvantages.

A sole proprietorship is a form of business organization that is run under the exclusive ownership, management and control of an individual.

Sole ownership. One-man control. Contribution of owned and/or borrowed capital. No sharing of profits or losses. No separate legal entity of the firm proprietor and the firm identical. Unlimited liability. Freedom from government regulation.

Ease of formation. Quick decisions. Flexibility of operations. Direct and exclusive control. Direct motivation. Personal touch and direct contact with customers. Secrecy. Minimum government regulation.

Limited finances. Limited managerial ability. Limited scope of growth. No economies of large scale and specialization. Unlimited liability. Uncertainty of continuity.

Where capital requirement are small and the risk is not heavy. Where decision-making has to be quick. Where the customers require personal attention.

Partnership is a form of business organization came into existence to overcome the limitation of one-man business in terms of financial resources , limited managerial skill and ability .

 Association

of two or more persons : Banking business the partners should not exceed 10. And other business the partners should not exceed 20. Agreement : Partnership can be formed only by contract. Business : Partnership is formed to carry on business. Sharing of Profits : The division of profits is an essential condition for the existence of partnership.

Mutual Agency : Each partner is the agent of the firm as well as other partners. No Separate Legal Existence : The partnership firm is voluntary association of persons and it has no separate legal entity of its own. Unlimited Liability : Each partner is liable jointly and severally for all debts and obligations of the firm to be an unlimited extent. Utmost Good Faith : Every partner should be faithful to other partner. Restriction On Transfer Of Interest : A partner cannot transfer his rights or interests in a partnership firm.

Formation. Finance. Control. Management of Affairs. Duration of partnership. Taxation.

Active or Actual Partner . Dormant or Sleeping Partner . Nominal Partner . Partner in Profit Only . Partner by Estoppel or Holding out .

Ease of formation. Larger financial resources compared to sole proprietorship . Flexibility. Benefits of combined ability and balanced judgment. Reduced risk . Business approach.

Lack of harmony. Limited resources due to number of partners. Instability. Lack of public confidence. Non-transferability of interest by a partner without the consent of all other partners.

Joint Hindu Family Firm is governed by Hindu Law . Two types Dayabhaga - Bengal and Assam. Mitakshara - Rest of India. A business, which continues from one generation tom another generation is known as joint Hindu family business or firm. This is special form of business organization, which now exists only in India. And the business is with in the family. The head of the family is the head of the business also. He is known as karta and the members are known as coparceners.

Equitable distribution of profits. Centralized and efficient management. Freedom of action. Sharing of knowledge. Group effort and cooperation. Stability. Secrecy.

Limited resources. Lack of motivation. Limited managerial ability. Scope of misuse of authority. Fear of disintegration because of family disputes.