Class 11 Business Studies Chapter 2 – Forms Of Business
Organisation Notes
The major topics covered in the chapter have been listed below for students’
reference.
Forms of Business Organisation
There are different forms of business organisation which are discussed in this
chapter. These include the following:
1. Sole proprietorship
2. Joint Hindu family business
3. Partnership
4. Joint-stock Company
5. Cooperative Societies
Sole Proprietorship
It is a form of organisation owned, managed and controlled by an individual
(also known as a sole proprietor) who is responsible for bearing all the risk
and receiving all the profit.
Features
The sole proprietor can establish and close the business without any
legal formalities.
The liability of the sole proprietor is unlimited.
Being the sole owner, the sole proprietor bears all the risk and receives
all the profits.
All the decisions are taken and implemented in the organisation by the
owner.
Owners and businesses have no separate entity and are considered
one in the eyes of the law.
Even in case of a lack of business continuity, the business can continue
until the owner wants.
Advantages
, Prompt decision-making as all the decisions are to be taken by the
owner.
Being a sole owner, it is easy to maintain business secrecy.
The owner enjoys all the profits as there is no one to share profits.
A successful business provides satisfaction to the owner and a sense of
achievement.
No legal formalities are required for a business’s formation and closure,
making it easy to start and end the business.
Disadvantages
Due to limited resources, a business can be funded from the owner’s
savings or money borrowed from friends or relatives.
The business’s continuity depends on the owner’s health and state of
mind.
If the business fails to repay debts, the sole proprietor’s personal
assets are at risk.
One person may not possess the ability to manage all the functions.
Joint Hindu Family Business
In this form of business organisation, the business is owned and managed by
the members of an undivided Hindu family, with the possibility of three
successive generations as members of the business.
Features
The business is formed with at least two members of a Hindu
Undivided Family having ancestral property. The Hindu Succession Act,
1956, governs it.
Except for Karta, all the family members have limited liability up to
their share in the business property.
Karta has the right to control all the activities in the business
organisation.
The business can be discontinued based on the consent of all the
members of the family.
Membership in the organisation is by birth.
Organisation Notes
The major topics covered in the chapter have been listed below for students’
reference.
Forms of Business Organisation
There are different forms of business organisation which are discussed in this
chapter. These include the following:
1. Sole proprietorship
2. Joint Hindu family business
3. Partnership
4. Joint-stock Company
5. Cooperative Societies
Sole Proprietorship
It is a form of organisation owned, managed and controlled by an individual
(also known as a sole proprietor) who is responsible for bearing all the risk
and receiving all the profit.
Features
The sole proprietor can establish and close the business without any
legal formalities.
The liability of the sole proprietor is unlimited.
Being the sole owner, the sole proprietor bears all the risk and receives
all the profits.
All the decisions are taken and implemented in the organisation by the
owner.
Owners and businesses have no separate entity and are considered
one in the eyes of the law.
Even in case of a lack of business continuity, the business can continue
until the owner wants.
Advantages
, Prompt decision-making as all the decisions are to be taken by the
owner.
Being a sole owner, it is easy to maintain business secrecy.
The owner enjoys all the profits as there is no one to share profits.
A successful business provides satisfaction to the owner and a sense of
achievement.
No legal formalities are required for a business’s formation and closure,
making it easy to start and end the business.
Disadvantages
Due to limited resources, a business can be funded from the owner’s
savings or money borrowed from friends or relatives.
The business’s continuity depends on the owner’s health and state of
mind.
If the business fails to repay debts, the sole proprietor’s personal
assets are at risk.
One person may not possess the ability to manage all the functions.
Joint Hindu Family Business
In this form of business organisation, the business is owned and managed by
the members of an undivided Hindu family, with the possibility of three
successive generations as members of the business.
Features
The business is formed with at least two members of a Hindu
Undivided Family having ancestral property. The Hindu Succession Act,
1956, governs it.
Except for Karta, all the family members have limited liability up to
their share in the business property.
Karta has the right to control all the activities in the business
organisation.
The business can be discontinued based on the consent of all the
members of the family.
Membership in the organisation is by birth.
