Reading 18: Estrepreneurs Chooses of Busis Orsation Why ace sole propriletonship
ID: 2794192 • Letter: R
Question
Reading 18: Estrepreneurs Chooses of Busis Orsation Why ace sole propriletonships the most commn form of baxiess organiratice? Why are most sole propeietonsips relatively small? What is unlimited liability? Why should etre reseen be veryeful whmthey fm partnerships? What is a share of stock Whoy are almost all large bsineys corporstions How ls s corporation's board ef directors chosen? Explain the limited liability of gweers of corporatioes etrepreneur maht encounter when bying.n echtingfm Describe the posalble advantages mddiahatagesthat What is a franchise? A. sole proprletorshlp B. partnershlp C. corporation 1. It is the least common form of business organtration. -2. Itis the type with thegreatest total sales. -3. It has unlimited liability. 4. Itan ral se the largest amount ofmoney. -5. The owner has individual control, . It must be reorganized when the owner dies. 7. It is the most common form of business organization 8. It creates a legal ndtvidual. 9. It des not need to be reorganted when an owner dies. 10. Ofall formsofbusiness oraanizatias, It is the least able toralse maney.Explanation / Answer
There are various forms of business Organisations:
Private Ltd Company
A private company has the following features:
Public Ltd Company :
A public Ltd company has the following characteristics:
Unlimited Company
Unlimited Company is a form of business organization under which the liability of all its members is unlimited. The personal assets of the members can be used to settle the debts. It can at any time re-register as a limited company under section 32 of the Companies Act.
Sole proprietorship
Sole proprietorship is a form of business entity where a single individual handles the entire business organization. He is the sole recipient of all profits and bearer of all loses. There is no separate law that governs sole proprietorship.
Joint Hindu Family
Joint Hindu Family is a form of business organization wherein the members of a family can only own and manage the business. It is governed by Hindu Law.
Partnership
Partnership is “the relation between persons who have agreed to share the profits of the business carried on by all or any one of them acting for all”. It is governed by the Indian Partnership Act 1932.
Co-operatives
Co-operatives is a form of voluntary organization, wherein the members work together for the promotion of the interests of its members. There is no restriction to the entry or exit of any member. It is governed by Cooperative Societies Act 1912.
Limited Liability Partnership
Under LLP (Limited Liability Partnership) the liability of at least one member is unlimited whereas rest all the other members have limited liability, limited to the extent of their contribution in the LLP. Unlike general partnership this kind of partnership does not get terminated by the death or insolvency of the limited partners. It is governed by Limited Liability Partnership Act of 2008.
Liaison Office
Liaison Office is a kind of representative office which is set up to understand the business and investment environment. It is barred from taking up any commercial/industrial/trading activity and its role is limited to aggregation of information and promotion of exports/imports. It has to maintain itself out of inward remittances received from the parent company.
Branch Office
Foreign companies which are into manufacturing and trading activities abroad are permitted to set up branch offices in India for various purposes like rendering of professional and consultancy services, export/import of goods etc. Branch offices are not permitted to carry out manufacturing activities on their own. RBI is the statutory body that grants permission to foreign companies for setting up branch offices in India.
Project Office
Foreign companies can set up temporary project offices in India for carrying out activities related to that specific project.
Subsidiary Company
In India the sectors where 100% foreign direct investment is permitted there foreign companies can set up wholly-owned subsidiary. The wholly-owned subsidiary can be either of the following business entities:
Choosing a form of business organization
Criteria
Most beneficial
Least beneficial
Cost of formation
Sole Proprietorship
Company
Ease of formation
Sole proprietorship
Company
Transfer of Ownership
Public Ltd Company
Partnership
Continuity
Company
Sole proprietorship
Regulations
Sole Proprietorship
Company
Flexibility
Sole proprietorship
Company
Availability of capital
Company
Sole proprietorship
Liability
Company and LLP
Sole proprietorship
Regulatory requirements and statutory bodies involved in starting a business
Criteria
Most beneficial
Least beneficial
Cost of formation
Sole Proprietorship
Company
Ease of formation
Sole proprietorship
Company
Transfer of Ownership
Public Ltd Company
Partnership
Continuity
Company
Sole proprietorship
Regulations
Sole Proprietorship
Company
Flexibility
Sole proprietorship
Company
Availability of capital
Company
Sole proprietorship
Liability
Company and LLP
Sole proprietorship
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