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FORMS OF BUSINESS

ORGANIZATION
Business- is a human activity, which is undertaken to
provide goods and services to the people with a view to
earn profit.

Organization- the word organization is generally divided


into two parts.
1. material organization- is the determining and
provision of necessary raw materials, tools, capital to
enterprises for their smooth running and functioning.
2.human organization-it is the appointment of
qualified staff and assigning them different duties and
responsibilities for the sake of business organization.
WHAT IS BUSINESS ORGANIZATION?

The process of establishing effective cooperation


among different people to achieve certain goals to earn
profit
Types of business organization

 Sole proprietorship

 Partnership

 Corporation
SOLE PROPIETORSHIP

 It is owned and controlled by an individual


who is responsible of all profits and bearer of
all risks
SOLE PROPRIETORSHIP

ADVANTAGES DISADVANTAGES

 Easy and inexpensive to form.  Unlimited personal liability


 The owner receives all the  Difficult to raise capital.
profit.
 Owner has complete control
over business.
 It is the arrangement of two or more people that
share profits and liabilities for business venture.
Partnership

Advantages. Disadvantages

 Easy to form  More people to share in the


 Partners an combine expertise profit
 Combine capital  Partners have unlimited
 Spread workload liability
 Easier to raise fund  Disagreements can occur
 Dissolves if partner died.
PARTNERSHIP AGREEMENT

It is an agreement among partners which sets at the term on


which they were agree to form a partnership .

 How the business decisions will be made


 How the partners will resolve disagreement
 How the partners will divide the profits
 How the partner cover the losses
 How ownership changes will be handled
 Who can legally bind the business through contracts
 How to dissolve the partnership
CORPORATION

 is a business entity that is owned by its


shareholder(s), who elect a board of directors to
oversee the organization's activities
CORPORATION

ADVANTAGES DISADVANTAGES

 Limited liability  Difficult to start


 Flexible profit and loss  NOT simple to operate
distribution
 Separation of
management/ownership
 More money for investment
 Unlimited life of business
Shareholders

Board of directors President

Chief Executive
Officer

Chief Operating
Officer
Chief Financial
Officer
Choosing a form of Business
Organization

 The nature of business is the most important


 Scale of operations and the size of the market area.
 The degree of control desired by the owner.
 The amount of capital required for the establishment
and operation of the business.
 The volume of risks and liabilities as well as the
willingness of the owners to bear it.
 Comparative tax ability
IMPORTANCE OF BUSINESS
ORGANIZATION
 Product growth
 Efficient use of resources
 Technological improvements
 Creative thinking
 Use of skilled salesman
 Quick decisions
 Recognition of problems
 Fixing responsibility
 Feed bank
 Minimum cost
THANK YOU! 

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