Question

“Business may be owned by an individual or a group of persons.” In the light of the above statement enlist different forms of business organizations and explain how they are different from each other

Answer 1

Different forms of business organisations 1) Partnership 2) Sole trader 3 ) PLC

Answer 2

The different forms of business organizations are as follows.
1) Sole Proprietorship
2) Joint Hindu Family Business
3) Partnership
4) Cooperative Society
5) Joint Stock Company
The explanation of each business organization.
1) Sole Proprietorship:-
The word 'sole' means "only" and proprietor refers to the "owner". Hence a sole proprietor can be explained as the only owner of a business. This form of business is mostly common in areas of personalized services, like setting up of beauty parlours, hair saloons and small scale activities such as operating a retail shop in a locality.
2) Joint Hindu Family Business:-
Joint Hindu family Business is a specific form of business organization found only in India and in Hindu religion. It is one of the oldest forms of business organization in our India. It refers to a form of organization in which the business is owned and carried on by the members of the Hindu Undivided Family (HUF). It is governed by the Hindu Law. The basis of membership in the business is birth in a particular family and three successive generations can be members in the business. The business is controlled by the head of the family, who is the eldest member of the family and is called 'Karta'. All members have equal ownership right over the property of an ancestor and they are known as 'co-parceners'.
3) Partnership:-
Partnership serves as an answer to the needs of greater capital investment varied skills and sharing of risks. Partnership is the relation between persons competent to make contracts who have agreed to carry on a lawful business in common with a view to private gain. The Partnership form of business organization is governed by the Indian Partnership Act 1932. It comes into existence through a legal agreement wherein the terms and conditions governing the relationship among the partners, sharing of profits and losses and the manner of conducting the business are specified.
4) Cooperative Society:-
Cooperative society is a form of organization wherein person voluntarily associate together as human beings on the basis of equality for the promotion of an economic interest for themselves. The word cooperative means working together and with others for a common purpose. The cooperative society is a voluntary association of persons, who join together with the motive of welfare of the members. The cooperative society is compulsorily required to be registered under the Cooperative Societies Act 1912. AMUL is the best example of a cooperative society.
5) 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. The company form of business organization is governed by The Companies Act 1956. A company can be described as an artificial person having a separate legal entity, perpetual succession and a common seal. The shareholders are the owners of the company while the Board of Directors is the chief managing body elected by the shareholders. Usually, the owners exercise an indirect control over the business. The capital of the company is divided into smaller parts called 'shares' which can be transferred freely from one shareholder to the another person.