FORMS OF CHOICE OF BUSINESS ORGANISATION CHOICE OF FORMS OF BUSINESS ORGANISATIONCHOICE OF FORMS OF BUSINESS ORGANISATION

FACTORS Cost and ease in setting up the organization Liability Continuity: Management ability: Capital considerations Degree of control Nature of business

Cost and ease in setting up the organisation SOLE PROPRIETORSHIP PARTNERSHIPCOOPERATIVEJOINT STOCK is the most inexpensive of all Registrations are mandatory an the formation of a company is lengthy and expensive as well the legal requirements are minimum an the sale of operations are also small. the legal requirements and the cost is minimum due to the limited scale of operations. initial cost factor, sole proprietorship is the most economical There is more cost involved in the formation of a company

LIABILITY SOLE PROPRIETORSHIP PARTNERSHIPCOOPERATIVEJOINT STOCK THE LIABILITY OF THE OWNERS UNLIMITED THELIABILITYOF THE PARTNERS IS UNLIMITED THE LIABILITY IS LIMITED CREDITORS CAN FORCEE PAYMENT OF THEIR CLAIMS ONLY TO THE EXTENT OF COMPANIES ASSEST COMPARE TO OTHERS COMPANY IS SUITABLE

CONTINUITY SOLE PROPRIETORSHIP PARTNERSHIPCOOPERATIVEJOINT STOCK Death, insolvency or insanity affects the sole proprietorship Death, insolvency or insanity affects the PARTNERSHIP This is not so in the case of a Joint Hindu Undivided family, co-operative societies and companies. In short term project, sole proprietorship or partnership is preferred

MANAGEMENT ABILITY SOLE PROPRIETORSHIP PARTNERSHIPCOOPERATIVEJOINT STOCK A sole proprietor might not be well versed in all the activities. There is no such problem in forms like partnership. But there is a drawback of conflict or difference in opinion There is no such problem in forms like companies. But there is a drawback of conflict or difference in opinion Proprietorship or partnership is recommended when the operations are simple and requires less skills to run the show Complexity of organizational structure also requires professional handling an for this, company form is best. the nature of operations and professional management decides the form of organization to be chosen.

CAPITAL CONSIDERATION SOLE PROPRIETORSHIP PARTNERSHIPCOOPERATIVEJOINT STOCK the resource of sole proprietors is limited. The combined resources of all partners is available in partnership Companies collect huge amount of capital from investors in the form of shares Depending upon the scale of operations, company form can be opted and for small or medium sized business, one can choose sole proprietorship or partnership business. In terms of expansion, company form is preferred due to the capacity to raise funds and invest them in the infrastructure.

DEGREE OF CONTR0L SOLE PROPRIETORSHIPPARTNERSHIPCOOPERATIVEJOINT STOCK For direct control over the operations, sole proprietorship may be chosen When the partners do not mind sharing the decision making, partnership may Be the one suitable In the company form of organization, there is total separation of opening the management because there are specialized personnel to handle the company affairs.

NATURE OF BUSINESS SOLE PROPRIETORSHIPPARTNERSHIPCOOPERATIVEJOINT STOCK : For direct contact with customers, sole proprietorship is preferred In case of large scale operation and the contact with customers is not mandatory, then company form is preferred

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