This document provides an overview of different forms of business organizations in India. It discusses sole proprietorships, joint Hindu family businesses, partnerships, cooperative societies, and joint stock companies. For each type of organization, it outlines key definitions, characteristics, advantages and disadvantages. The document also covers factors to consider when starting a business and provides examples to illustrate different concepts.

1. Forms of Business organisations

2. 1) Introduction
2) Sloe Proprietorship
3) Joint Hindu Family
4) Partnership Firm
5) Co – operative society
6) Joint Stock company
7) Basic Factors to Star A Business
8) Distinguish between
9) Exercise
Point of discussion

3. Introduction
• It is an institution which is engaged in manufacturing and providing
services to the society
• “ It is the framework or structure of efficiently conducting industrial and
commercial activities to earn profit or with a view to gain it through
production and supply of goods and services”

4. Types of Business organizations
Private sector Public sector
Sole Trading concern
Joint Hindu Family business
Partnership Firm
Joint Stock Company
Co- Operative Societies
Departmental Undertakings
Statutory Corporations
Government Companies

5. Sole Trading Concern
 Proprietor means owner & sole means single
 It is owned, managed & Controlled by an individual entrepreneur.
 This is one man business or Individual proprietorship or Individual Entrepreneurship
 Owner is called as Sole trader & he is one man show
 Business is usually operates in local market
1. Retailer
2. Painters
3. Restaurant
4. Beauty parlour
5. Doctor
6. Petrol pumps

7. JAMES A. SHUBIN
“Under the sole proprietorship form of ownership a single individual organizes, has
title to and operates the business in his own name.”
CHARLES S. TIPPETS
“The proprietorship is that form of business organization which is owned, managed and
controlled by a single individual who receives all the profits and risks all his property
in the success or failure of the enterprise.”
D.W.T.STAFFORD
“It is a simplest form of business which is owned and controlled by one man.”
Definitions

8. Advances/Merits of Sole Proprietorship
Easy formation
Benefit of secrecy
Direct motivation
Quick decisions
Lower costs
Development
Flexibility in operation
Limited government control
Credit standing
Efficiency

9. Disadvantages / Demerits
Limited Managerial ability
Limited amount of capital
Unlimited liability
Not suitable for large scale operation
Lack of stability
Absence of specialization
Unprofessional Decisions

12. • It is run by the family member & they run the business as family business
• Comes into existence by the law of inheritance
• Created by the operation of Hindu
• It is governed by the Hindu Succession act 1956
• The head of family is called as Karta or Manager & other person is co – parceners
• Mitakshara
• Dayabhaga
Joint Hindu Family business

13. Definition
Meaning: -: -A business, which continues from one generation to 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.
• Joint Hindu Family is governed by the Mitaksara Law.

14. Merits / Advantages
Easy to start
Prompt Decisions
Good relation with employees
Flexibility
Secrecy
Co – parcener’s Liability
Good credit standing
Continuity and stability

15. Disadvantages / Demerits
Limited Resources
Limited managerial skills
Unlimited liability of Karta
Breaking of joint family
Lack of Direct Efforts
Restricted Expansion
Continuity

17. Introduction
 Because of limited capital & other factors , sole proprietorship may not….
 A business owned & managed by more than one person
 Share profit & loss equally
 Share liability equally
 They equally contribute their resources
 The owners are called partners & organization is called a firm
 It is governed by the Indian partnership act 1932.
 The agreement may be oral or written

18. Definition
 Indian Partnership Act 1932 (sec.4)
‘ Partnership is the relation between the persons who have agreed to
share the profits of a business carried on by all or any one of them acting for
all”
 Dr. J. A. Shubin :
“ Two or more individuals may form a partnership by making a
written or oral agreement that they will jointly assume that they will
jointly assume full responsibility for the conduct of a business
 Prof. Haney :
“ The relation existing between persons competent to make contracts,
who agree to carry on a lawful business, in common, with a view to
private gain”

19. Merits / Advantages
More financial Resources
More manpower Resources
Easy formation
Simple dissolution
Rational decisions
Secrecy
Personal contacts
Division of Risk
Flexible organization
Managerial skills

20. Demerits / Disadvantages
Unlimited liability
Limited resources
Disputes
Risk of implied authority
No separate legal status
Attitude problem
Lack of Managerial skills
No succession
Lack of management skills
Problem of secrecy

21. Types of Partners
Active partners
Nominal partners
Minor partners
Partners in profits only
Limited partners
Partner by holding out
Secret partner

22. Co-operative Society

23.  It is voluntary association of persons who come together to collect small saving
of difference people through a society
 Adopt principle of self help & mutual help
 Each for all & all for each
 Provide services to the society & consumer
 Minimum of 10 persons are required to form a co-operative society
 There is no maximum limit for membership
Introduction

25. Definition
• According to International labour organization,
“ An association of persons, usually of limited means who have voluntarily
joined together to achieve a common economic end through the formation
of democratically controlled business organization, making equitable
contribution to the capital required and accepting a fair share of risks and
benefits of the undertaking.”
• According to Indian co-operative societies act, 1912,
“Co-operative society is a society which has its objectives for the
promotion of economic interests of its members in accordance with co-
operative principles.”

26. Types of Co-operative society
 Consumer’s Co-operative society
 Credit Co-operative society
 Producer’s Co-operative society
 Marketing Co-operative society
 Farming Co-operative society
 Housing Co-operative society

27. Merits / Advantages

28. Demerits
Lack of capital
Rigid government rules
Lack of public confidence
Lack of motivation
Mutual disputes
Stability
Limited scope of expansion
No secrecy

29.  The industrial revolution took place in 1760 (Machine age )
 Due to non availability of ….
 capital
 Managerial skills
 professional specialization
 other factors
Joint Stock company

31. Meaning
1) a joint stock company is a separate entity formed by a number of
persons contributing a fixed capital in the formation of shares with
liability of each share holder being limited to his investment in the
company only.
2) The management of the company is done professionally by experts
who are not the owners and are controlled by the representatives of the
share holders are called the board of directors

32. Definition
• According to Indian Companies act, 1956 Sec. 566.
“ A company having a permanent paid up or nominal share
capital of fixed amount, divided into shares, also of fixed value,
held and transferable as stock, or divided and held partly in one
way and partly in the other and formed on the principle of having
for its members, only the holders of those shares or that stock and
not other persons”.
• According to Prof. Haney :
“ A joint stock company is a voluntary association of individuals
for profit having capital divided into transferable shares, the
ownership of which is the condition on membership.”

33. Private limited company
According to sec 3 (I) (iii) of the companies act, 1956
• Restricts the right to transfer its shares
• Restrict the number of its members up to 2 to 50
• Ban on inviting to the public to subscribe for any shares in or
debentures of the company
• Prohibits any invitation or acceptance of deposits from any person
• Must have a minimum paid up share capital of one lakh rupees

34. Public company
According to Sec 3 (I) public company means which is not a
private company
• Has no restriction on the transfer of its shares
• There should be a minimum number of members are 7
• Has a minimum paid up share capital of Rs. 5,00,000/- or
such higher paid up capital as may be prescribed
• Does not prohibit any invitation or acceptance of deposits
• Must have a list 3 directors

35. Merits / Advantages
Large capital
Democratic management
Transferability of shares
Limited liability
Expert services
Relief in taxation
Public confidence
Scope for growth & expansion

36. Disadvantages / Demerits
Difficulty in formation
Delay in decision making
Excessive government control
High cost of management
No personal contact
Lack of secrecy
No direct efforts reward relationship
No secrecy

37. Factors to be considered for starting business
Identification of business opportunity
Raw material
Technology and equipment
Human resources
Financial planning
Utilities
Selection of location
Form of business organization

38. Exercise