SOLE PROPERITERSHIP & PARTNERSHIP

8/7/2019 SOLE PROPERITERSHIP & PARTNERSHIP

1/28

Presented By:Shilpa Chandel


2/28

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.


3/28

ENTREPRENEURIAL FORMS OF

CONDUCTING BUSINESS

SoleSoleProprietorshipProprietorship GeneralGeneral

PartnershipPartnership

LimitedLimitedPartnershipPartnership

Limited LiabilityLimited LiabilityCompanyCompany

Limited LiabilityLimited LiabilityPartnershipPartnership


4/28

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


5/28

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.


6/28

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.


7/28

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.


8/28

CAPITAL

The capital required by a sole proprietorshipis totally arranged by the sole proprietor.


9/28

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.


10/28

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.


11/28

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


12/28

D isadvantages of a Sole Proprietorshi

Limited Capital

Unlimited liability

Lack of Continuity

Limited S ize

Lack of managerial expertise


13/28

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.


14/28

GENERALLY LOCAL BUSINESS


15/28


16/28

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?&.


17/28

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.


18/28

P A RT E N E R S

partnership with one another are calledindividually "partners" .


19/28

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


20/28

Association of at least two persons At least twopersons must joint together to form a partnership.

A ssociation of

two or morepersons


21/28

There must be an agreement betweenpersons desirous of forming a partnership.

C ontract

Partner ship is the result of a contract.


22/28

E arning of profit

The agreement must be to shareprofit/loss of a business.


23/28

I s I t C orrect I n Partenership ?


24/28

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.


25/28

Why creates partnership ?

More capital

S haring risks

Managerial skills

Better decisions


26/28

Adv antages of

partnership business

E asy to form

Availability of large resources

Flexibility in operation


27/28

D isa dv antages of Partnership Business

Unlimited liability

Uncertain life

Limited capital

No transferability of share


28/28

Documents

SOLE PROPERITERSHIP & PARTNERSHIP