sole properitership & partnership
TRANSCRIPT
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Presented By:Shilpa Chandel
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INTRODUCTION
The most straight forward and simpletype of business organization is individual
or sole proprietorship. It is the first stageof business organization. The sale traderis an individual who invest his capital,employees, necessary labour ,directs the
activities of the business and bears therisk of business.
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ENTREPRENEURIAL FORMS OF
CONDUCTING BUSINESS
SoleSoleProprietorshipProprietorship GeneralGeneral
PartnershipPartnership
LimitedLimitedPartnershipPartnership
Limited LiabilityLimited LiabilityCompanyCompany
Limited LiabilityLimited LiabilityPartnershipPartnership
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Sole Proprietorship
A business enterprise exclusively owned,managed and controlled by a singleperson with all authority, responsibility and risk.
S ingle OwnershipNo sharing of Profit and LossOne-mans CapitalOne-man ControlUnlimited LiabilityLess legal formalities
C haracteristics
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SINGLE OWNERSHIP BUSINESS
A single individual owns the sole proprietorship! Thatindividual owns all the assets and properties of thebusiness. He alone bears all the risk of the business.
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PROFIT AND LOSS
The entire profit out of the sole proprietorship businessgoes to the sole proprietor. Nobody else shares any of theprofit and loss of the business.
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ONE MAN CONTROL
The controlling power in a sole proprietorship business
always remains with the owner alone. The owner or proprietoralone takes all the decisions to run the business. He may takedecisions though a consultant or some advice, but the finaldecisions are always in his hand.
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CAPITAL
The capital required by a sole proprietorshipis totally arranged by the sole proprietor.
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UNLIMITED LIABLITIES
The liability of the sole proprietor is unlimited. This implies
that, in case of loss the business assets along with thepersonal properties of the proprietor shall be used to paythe business liabilities.
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C reation of a Sole Proprietorship
No formalities.No federal or state government approval
is required.S ome local governments require a license
to do business within the city.
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E asy and low cost of formation.Owner can make all management decisions.
hiring and firing employees.
No other approvals required.Direct MotivationHas the right to receive all of the businesssprofits.
E asily transferred or soldBetter control
A dvantages of a Sole Proprietorship
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D isadvantages of a Sole Proprietorshi
Limited Capital
Unlimited liability
Lack of Continuity
Limited S ize
Lack of managerial expertise
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EXAM PL E
W e go to the market to buy items of our daily needs.In the market we find a variety of shops- some of themsmall and some of them big. S mall shops likevegetable shops, grocery shops, telephone booths,chemist shops, etc. W e may find some persons selling vegetables, peanuts, newspapers etc on the roadside.W e may also find cobbler repairing shoes on thefootpath. E veryday you come across such types of shops in your locality.
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GENERALLY LOCAL BUSINESS
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the ans. is
the owner invests capital to start the business,takes all decisions relating to business,looks after the day to day functioning of the
business and finally,responsible for the profit or loss.
But how these businesses are run?W ho are the owners of these businesses?
W hat exactly does an owner do for any business?&.
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P A RT E N E R SH I PPartnership is the relation between personswho agreed to share the profit of thebusiness carried on by all or any of themacting for all.
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P A RT E N E R S
partnership with one another are calledindividually "partners" .
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Partnership is the association of two or more persons
Contract- Partner ship is the resultof a contract.
Carrying on of business
S haring of profit
Mutual agency
C HA R A CT E R S TIC S
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Association of at least two persons At least twopersons must joint together to form a partnership.
A ssociation of
two or morepersons
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There must be an agreement betweenpersons desirous of forming a partnership.
C ontract
Partner ship is the result of a contract.
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E arning of profit
The agreement must be to shareprofit/loss of a business.
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I s I t C orrect I n Partenership ?
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Mu t u al agency
The business of partnership may becarried on by all the partners or by any
of them acting for all. Thus every partneris an agent of other partners and at thesame time of the firm.
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Why creates partnership ?
More capital
S haring risks
Managerial skills
Better decisions
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Adv antages of
partnership business
E asy to form
Availability of large resources
Flexibility in operation
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D isa dv antages of Partnership Business
Unlimited liability
Uncertain life
Limited capital
No transferability of share
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