Summary

Forms of business organisation are the types of organisations that differ in their ownership and management. The five major forms are the sole proprietorship, partnership, joint Hindu family business, cooperative society and company.

• Sole proprietorship is owned, managed and controlled by a single individual who bears all risks and receives all profits. Its merits include quick decision-making, direct incentive, personal satisfaction and ease of formation and closure; its limitations are limited resources, an unstable life span, unlimited liability and limited managerial ability.
• Partnership is an association of two or more persons who agree to carry on a business and share profits and bear risks collectively. Merits: ease of formation and closure, benefits of specialisation, greater funds and reduced risk. Limitations: unlimited liability, possibility of conflicts, lack of continuity and low public confidence. It has different types of partners (active, sleeping, secret, nominal, by estoppel, by holding out) and types of partnerships (general, limited, at will, particular), and is usually governed by a partnership deed, with registration being optional.
• Joint Hindu family business is owned and carried on by the members of a Hindu Undivided Family under Hindu Law, and is controlled by the karta (the eldest member). Strengths: effective control, stability, limited liability of members and increased loyalty. Limitations: limited resources, dominance of the karta, unlimited liability of the karta, and limited managerial ability.
• Cooperative society is a voluntary association formed to protect members' economic interests. Merits: equality in voting, limited liability, stable existence, economy in operations, government support and ease of formation. Limitations: limited resources, inefficiency in management, lack of secrecy, government control and differences of opinion. Its types include consumers', producers', marketing, farmers', credit and cooperative housing societies. …