Form of Business Organization

Introduction

A business enterprise can be owned and organized in several forms. Each form has its own merits and demerits. The ultimate choice of form of business is governed by several interrelated and interdependent factors:

• The nature of business
• Scale of operation
• Degree of control desired by the owner
• Volume of risks and liabilities
• Comparative tax liability

Type of business structure in India

Sole Proprietorship:

This is simplest and most common form of business which an owner can start. To start with registration is not required.

It is one-man organization where a single person owns, manages and control s the business

Main features:

• Ease formation
• The capital required is supplied wholly by the owner himself
• Owner has complete control over all aspect of the business.
• Owner alone enjoys the benefits of profits of the business and he alone bears the losses
• The business has no legal existence separate from its owner.
• The liability of the proprietor is unlimited
• Lack of continuity.

Advantages:

• Cheapest and easiest form of business structure
• Owner can keep or reinvest the income as he/she wishes
• Owner is in complete control of the business
• It is easy to setup and dissolve
• Maximum incentive for work
• Secrecy of business
• Quick decision and flexibility of operations