Forms of Business Organisation or Ownership

Forms of Business Organisation or Ownership

Forms of Business Organisation or Ownership

There are five forms of business organization

  1. Sole proprietorship
  2. Partnership
  3. Joint stock company
  4. Co-operative Society
  5. Government Sector


1. Sole proprietorship:-

It is a business owned by one person then it is called Sole proprietorship.


  • Sole ownership
  • Free from legal products in the establishment and binding up.
  • Sole management
  • Monopoly on total capital
  • Unlimited liability
  • Freedom of business

There is a direct relationship between effort and reward.

There is a direct relationship between employee and customer.

Advantage of a sole proprietorship:-

  • Small business can easily handle
  • The owner can enjoy the profit.
  • Freedom of work.
  • No complicated formalities to start the business.
  • The whole power of decision making is the hands of the owner.

The disadvantage of a sole proprietorship:-

  • The scope of signal ownership firm is small.
  • The growth rate is limited.
  • Whole loss has to bear by the proprietor.
  • Chances of the wrong decision.
  • Raising capital is a big problem.
  • Chances of success are very less.


2. Partnership:-

The partnership can be defined as the association of two or more people doing business together to share the profit or expenses coming out of the business.

In partnership, capital is raised by part, so profit, losses, and expenses are stored.


  • The organization of two or more person.
  • There should be agreement among partners.
  • There should be a business.
  • A partner can leave Partnership.
  • Unlimited liabilities.

Advantages of Partnership:-

  • Easy to start a business.
  • More capital
  • Union of business ability and skills.
  • Greater motivation.
  • Easy to proqueour loan.
  • Balanced Decision.
  • Special protection of minors
  • The economy is management.
  • Better for risky business.
  • Spirit of co-operation
  • Secrecy

Disadvantages of Partnerships:-

  • Always danger of friction and conflicts.
  • Unlimited liability.
  • Delay of Decision.
  • Uncertain Existence.
  • Limited Source of capital.
  • Even one partner can take the business into danger.
  • Lack of secrecy.


3. Joint Stock Company:-

A joint stock company is an association of individuals called shareholders. It’s joined together for profits.

Shareholders interest capital in the transferable shares for caring a specific business.

A joint stock company consists of more than twenty shareholders.

There are two types of joint shareholders company:

  1. Private limited joint shareholders company
  2. Public limited joint shareholders company

Advantages of joint stock Company:-

  • Large capital can be generated.
  • Business growth is a factor.
  • Liabilities are limited.
  • More stabilities, Efficiency, and Flexibility of management.
  • Funds are available for purchasing of new updated technology.

Disadvantages of joint stock Company:-

  • The formation process is lengthy.
  • Huge documentation is required.
  • The main motive is profit instead of warfare.
  • There may be a monopoly of big shareholders.
  • Difficult to maintain secrecy.

Applications of joint stock Company:-

  1. Automobile Industry
  2. Chemical Industry
  3. Pharma Industry
  4. Telecom Industry


4. Co-operative Society:-

An industry in which some members come together, extend their co-operation to start a business which serves the member as well as the society is called co-operative society.

Characteristics of Co-operative Society:-

  • It is a form of private ownership.
  • Service is the motive.
  • Democratic management.
  • Voluntary association.
  • A minimum number of members is 10 and the maximum number of members is unlimited.
  • Members attained periodic meetings and take decisions.

Advantages of Co-operative Society:-

  • A co-operative society is helpful for the growth or ruler society.
  • It is by the member of the members.
  • Easy formation.
  • Limited liabilities.
  • Elimination of middleman’s profit.

Disadvantages of Co-operative Society:-

  • Political interference is more.
  • Professionalism is very poor.
  • Decision making is slow.
  • Corruption is more.

Applications of Co-operative Society:-

  • Housing Co-operative Society.
  • Consumers Co-operative society
  • Marketing Co-operative society
  • Producers Co-operative society
  • Banking Co-operative society
  • Co-operative farming Co-operative society


5. Government Sectors:-

It is also called public or government enterprise.

Government is included partially or fully.

The motive is to provide services to society.

Profit is directly given by the government.

Huge capital is available hence, the business explanation is easy.

Advantages of Government Sectors:-

  • Huge capital can be raised.
  • Every action is according to the consultation and law of the country.
  • Create employment opportunities on an increasing scale.
  • Equal distribution of economic power.
  • Provide rapid economic development.

The disadvantage of Government Sectors:-

  • Political interference is more.
  • Productivity is less.
  • More wastage of inefficiency.
  • Corruption is high.
  • Management is poor.
  • Delay in Decision making.

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